Super rich 1% vs 99 %; Terrorism Cycle: Guillotines: Occupy “ALL” streets.

Super rich 1% vs 99 %; Terrorism Cycle: Guillotines: Occupy “ALL” streets.

HERE  and  HERE

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What caused the financial crisis? The Big Lie goes viral.

By Barry Ritholtz, Published: November 5

I have a fairly simple approach to investing: Start with data and objective evidence to determine the dominant elements driving the market action right now. Figure out what objective reality is beneath all of the noise. Use that information to try to make intelligent investing decisions.

But then, I’m an investor focused on preserving capital and managing risk. I’m not out to win the next election or drive the debate. For those who are, facts and data matter much less than a narrative that supports their interests.

One group has been especially vocal about shaping a new narrative of the credit crisis and economic collapse: those whose bad judgment and failed philosophy helped cause the crisis.

Rather than admit the error of their ways — Repent! — these people are engaged in an active campaign to rewrite history. They are not, of course, exonerated in doing so. And beyond that, they damage the process of repairing what was broken. They muddy the waters when it comes to holding guilty parties responsible. They prevent measures from being put into place to prevent another crisis.

Here is the surprising takeaway: They are winning. Thanks to the endless repetition of the Big Lie.

A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.

Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.

Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them.

The Big Lie made a surprise appearance Tuesday when New York Mayor Michael Bloomberg, responding to a question about Occupy Wall Street, stunned observers by exonerating Wall Street: “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.”

What made his comments so stunning is that he built Bloomberg Data Services on the notion that data are what matter most to investors. The terminals are found on nearly 400,000 trading desks around the world, at a cost of $1,500 a month. (Do the math — that’s over half a billion dollars a month.) Perhaps the fact that Wall Street was the source of his vast wealth biased him. But the key principle of the business that made the mayor a billionaire is that fund managers, economists, researchers and traders should ignore the squishy narrative and, instead, focus on facts. Yet he ignored his own principles to repeat statements he should have known were false.

Why are people trying to rewrite the history of the crisis? Some are simply trying to save face. Interest groups who advocate for deregulation of the finance sector would prefer that deregulation not receive any blame for the crisis.

Some stand to profit from the status quo: Banks present a systemic risk to the economy, and reducing that risk by lowering their leverage and increasing capital requirements also lowers profitability. Others are hired guns, doing the bidding of bosses on Wall Street.

They all suffer cognitive dissonance — the intellectual crisis that occurs when a failed belief system or philosophy is confronted with proof of its implausibility.

And what about those facts? To be clear, no single issue was the cause. Our economy is a complex and intricate system. What caused the crisis? Look:

●Fed Chair Alan Greenspan dropped rates to 1 percent — levels not seen for half a century — and kept them there for an unprecedentedly long period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).

●Low rates meant asset managers could no longer get decent yields from municipal bonds or Treasurys. Instead, they turned to high-yield mortgage-backed securities. Nearly all of them failed to do adequate due diligence before buying them, did not understand these instruments or the risk involved. They violated one of the most important rules of investing: Know what you own.

●Fund managers made this error because they relied on the credit ratings agencies — Moody’s, S&P and Fitch. They had placed an AAA rating on these junk securities, claiming they were as safe as U.S. Treasurys.

4 Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims.

5 The Securities and Exchange Commission changed the leverage rules for just five Wall Street banks in 2004. The “Bear Stearns exemption” replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. In its place, it allowed unlimited leverage for Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns. These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage leaves very little room for error.

6Wall Street’s compensation system was skewed toward short-term performance. It gives traders lots of upside and none of the downside. This creates incentives to take excessive risks.

7 The demand for higher-yielding paper led Wall Street to begin bundling mortgages. The highest yielding were subprime mortgages. This market was dominated by non-bank originators exempt from most regulations. The Fed could have supervised them, but Greenspan did not.

8 These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to get creative with underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value.

9 “Innovative” mortgage products were developed to reach more subprime borrowers. These include 2/28 adjustable-rate mortgages, interest-only loans, piggy-bank mortgages (simultaneous underlying mortgage and home-equity lines) and the notorious negative amortization loans (borrower’s indebtedness goes up each month). These mortgages defaulted in vastly disproportionate numbers to traditional 30-year fixed mortgages.

●To keep up with these newfangled originators, traditional banks developed automated underwriting systems. The software was gamed by employees paid on loan volume, not quality.

●Glass-Steagall legislation, which kept Wall Street and Main Street banks walled off from each other, was repealed in 1998. This allowed FDIC-insured banks, whose deposits were guaranteed by the government, to engage in highly risky business. It also allowed the banks to bulk up, becoming bigger, more complex and unwieldy.

●Many states had anti-predatory lending laws on their books (along with lower defaults and foreclosure rates). In 2004, the Office of the Comptroller of the Currency federally preempted state laws regulating mortgage credit and national banks. Following this change, national lenders sold increasingly risky loan products in those states. Shortly after, their default and foreclosure rates skyrocketed.

Bloomberg was partially correct: Congress did radically deregulate the financial sector, doing away with many of the protections that had worked for decades. Congress allowed Wall Street to self-regulate, and the Fed the turned a blind eye to bank abuses.

The previous Big Lie — the discredited belief that free markets require no adult supervision — is the reason people have created a new false narrative.

Now it’s time for the Big Truth.

Related content:

More from Post Business

Pearlstein: You bet it’s another bubble

Sloan: The bailout was awful, but it worked

Ritholtz is chief executive of FusionIQ, a quantitative research firm. He is the author of “Bailout Nation” and runs a finance blog, the Big Picture.

© The Washington Post Company

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Napoleon’s Curse

The illusion of omnipotence has exhausted America and spoiled its allies.

BY IAN BURUMA | NOVEMBER 2011

Too much power is not good for a person, or for a nation. It leads to hubris, to the childish illusion of omnipotence, and, even when driven by good intentions, to abuse.

In the case of the United States, the illusion of being exceptional, the idea that the “Greatest Nation in the History of the World” can do anything, is doubtless fed by the manner of the country’s inception. France and the United States are the only Western democracies born from revolutions. Like France, the American republic likes to claim that it represents not only the hopes of humankind, but universal values. The American way is the global way, or it jolly well should be.

What the French call la mission civilisatrice has also been a driving force for Americans. The national destiny is to civilize the benighted world. To believers in this mission — who are not always in the mainstream of U.S. politics, but have enjoyed a remarkable resurgence in the decade since the 9/11 attacks — it is not sufficient for the United States to be an example to the world. It is incumbent on the republic to export freedom and democracy, by force if necessary.

This is the Napoleonic side of U.S. foreign policy. As was true of France, the Napoleonic urge is rooted in the Christian tradition. French and American democracies may be secular, but the missionary zeal and the claims of universality surely owe something to the countries’ religious past.

Still, the illusion of American omnipotence was held in check by other powers, notably by the British Empire, and later by the Soviet Union, for much of America’s history. This is not to extol the virtues of the Soviet system, which were limited, to say the least. But Moscow at a minimum played the role of keeping things in perspective.

After 1989, there was ostensibly nothing to stop the American dream of shaping the world to its liking. You might say it was America’s Palmerstonian moment, when it acted like Victorian England’s Lord Palmerston, who believed that Britain’s duty was to use its might to reorder other nations, from Belgium to Afghanistan to China. Bush the Elder was still too cautious to fully embrace Palmerston’s liberal interventionism. His son was not. It was 9/11 that released American hubris in full force.

“We don’t want to fight, but by Jingo if we do: We’ve got the ships, we’ve got the men, we’ve got the money too.…” These were the words of a popular music-hall ditty in London in the 1870s, but they might have been sung in the streets of Washington around 2003.

But this American hubris, mixed with an atmosphere of paranoia, has brought disastrous results for others, and for the United States itself. Unnecessary wars, sometimes undertaken with true missionary zeal, are bleeding the country’s treasury and costing countless lives.

Not all the costs are direct. The gradual militarization of American society — the ritual genuflections to “our men and women in uniform,” the bloated military budgets, the fawning attitude to generals — has resulted in something more often associated with tin-pot dictatorships in the developing world: crumbling bridges, potholed roads, rotten schools, and an overbearing military loaded with all the best and latest hardware.

This is clearly not good for most Americans. But it isn’t good for U.S. allies, either. Sick of waging wars, for excellent reasons, Europeans and the Japanese have become like spoiled adolescents, almost totally dependent for their security on the big American father. Too indolent, or scared, to take more responsibility for their own protection, they express the humiliation of their dependency in fits of anti-American pique.

In East Asia, Pax Americana still rules, not only because the Japanese can’t make up their minds about whether to change their (American-written) pacifist constitution, but also because China, too, has long preferred the status quo. The alternative to being ringed by U.S. bases, after all, is to see the Japanese take over.

There are some signs that Europeans are beginning to wean themselves from the American parent. Yet the form this takes seems to be flattery through imitation. Just a few years ago, British Prime Minister Tony Blair still believed that it was Britain’s role to be an obedient, even zealous junior partner in the U.S. military mission to spread light unto the world. The latest venture in Libya, however, showed a more independent European spirit, led, unsurprisingly, by the French. It was as if President Nicolas Sarkozy, cheered on by some prominent French chauvinists, wanted to hitch the tricolor once more to its own mission civilisatrice. This time, the United States, exhausted by too many recent failures, took a back seat. Nonetheless, even this Franco-British mission could never have had any success without the wherewithal of U.S. power.

There is much talk, none of it very new, of the decline of the West, and of the United States in particular. China, so people claim, and in the long run perhaps India too, will assume the mantle of world power, just as Washington once took over from London. Perhaps this will come to pass. All great powers come to an end.

Yet neither China nor India, nor any other country, is likely to dominate the world soon in the way the United States has done. China’s ambition does not stretch beyond its Asian periphery, and India is still too poor and too battered by domestic rebellions to control its own territory successfully, let alone anywhere beyond Kashmir. American decline might still be a lengthy process. Failures in some sectors of the economy are partly made up for by successes in others: For all the Detroit plant closures, there’s a Google, a Microsoft, a Facebook. And whatever people might say to criticize America, many still wish to bask a bit longer in the security it claims to provide. But if history offers any indication, Napoleonic, or even Palmerstonian, politics always end up in mental and physical exhaustion. There is little doubt in my mind that the illusion of omnipotence, rather than lengthening the days of Pax Americana, has speeded up its eventual demise.

Save big when you subscribe to FP.

Javier Jaen

Dutch writer Ian Buruma, currently a Cullman Fellow at the New York Public Library, is author, most recently, of Taming the Gods: Religion and Democracy on Three Continents.

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>Occupy Wall Street, Nova Scotia

  1. Reuters logo
  1. Demonstrators gather in the Grand Parade in Halifax, Nova Scotia, Canada on Saturday, Oct. 15, 2011. The demonstration is one of many being held across the country recently in support of the ongoing Occupy Wall Street demonstration in New York. (AP Photo/The Canadian Press, Andrew Vaughan)

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And this Message is for who?

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Terrorism cycles

1 percent super rich vs 99 percent debt bonders & slaves, coming full circle and rounding the cycle, back to “Terrorism” in original meaning, against super rich privileged elites in systematic corrupt, crimes and abuses of Plutocracy later called Fascism (corporations with government collusion rule), that breeds the over reaction of hatred, vendetta and revenge… remembering the French revolution guillotine:   official State Terror breeding Reactionary Mob Terror, in France, etc, and the cycle runs it course.

Hmm … here we go again?

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Images can be powerful, and slogans even more.

Action and reaction, recycled breeds what?

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The pepper-spraying of innocent protesters last Saturday and the pictures of Wall Streeters doing their best Marie Antoinette impersonations — drinking champagne and mocking a protest march — have been particularly powerful.


Screen grab from YouTube

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ACTION

CHICAGO TRADERS RESPOND TO PROTESTERS WITH SIGNS READING ‘WE ARE THE 1%’ |

(HT: Chicagoist)

The Occupy Wall Street movement spread to Chicago this week, where protesters have gathered outside the Chicago Board of Trade, the world’s oldest options and futures trading center. Like the protesters in New York and other cities around the country, the group gathered to protest our nation’s growing income inequality, as the top 1 percent of Americans continue to see their incomes rise rapidly and their tax rates fall. The Chicago traders, confronted by the protesters’ “We are the 99 percent” message, crafted their own not-so-subtle reply, hanging signs in eighth-floor windows that said, “We are the 1%“:

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ACTION

Posted at 03:20 PM ET, 09/30/2011

‘Occupy Wall Street’ only growing stronger

By James Downie

When the Occupy Wall Street protests began nearly three weeks ago, skeptics claimed it was too disorganized and too unfocused to be successful. But the occupation hasn’t gone away – and that’s because, even as it has become more organized, the protest hasn’t adopted a specific platform.

Media coverage — even on the left — has been minimal, and what coverage has existed has been largely derisive. Cable’s liberal stalwart Rachel Maddow didn’t have a segment on the protest until last night, Mother Jones ran an article entitled “why #occupywallstreet isn’t working,” and Grist’s Dave Roberts said the occupation was “designed to discredit leftie protest.”

And, yet, the occupation is spreading. There are now occupations and solidarity demonstrations in dozens of cities around the country, including Los Angeles, Chicago and Boston. (D.C.’s version is scheduled for Oct. 6.)The Air Line Pilots Association has joined the protests, the 34,000-strong Transit Workers Union Local 100 voted unanimously to support the protests, and several other major progressive groups, including MoveOn.org and the SEIU, are finally throwing their weight behind the movement.

To some degree, of course, the images from the protest have played a role in organically popularizing the movement. The pepper-spraying of innocent protesters last Saturday and the pictures of Wall Streeters doing their best Marie Antoinette impersonations — drinking champagne and mocking a protest march — have been particularly powerful.


Screen grab from YouTube

The most important images, though, are in a collection of stories from what the protestors are calling “the other 99 percent” of America: people drowning in debt, people forced to choose between groceries and rent, people who work long hours for little pay and even less job security and yet are “the lucky ones.” There’s despair and sadness in these stories, but the most prevalent emotion is anger — at the few who were bailed out after crashing the economy and at leaders who have often ignored just how unequal the country has become. That anger is the one thing the protesters all agree on, and the biggest impulse driving the occupation forward.

As this anger demonstrates, despite what the skeptics demanded, these activists didn’t need to present yet another platform. Groups have been proposing platforms for years, under both Democrats and Republicans, and yet inequality continues to rise. Instead, simply changing the conversation is the best thing the protesters can do right now. While still in its earliest phases, the occupation is right to echo many Americans’ frustration that Wall Street and Washington have recovered, while the rest of the economy hasn’t. Should there be more specific ideas down the line? Of course. For now, though just focusing the conversation on Wall Street and inequality is victory enough.

http://www.washingtonpost.com/blogs/post-partisan/post/occupy-wall-street-only-growing-stronger/2011/09/30/gIQATepeAL_blog.html

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REACTION

99% to Bankers: We’ve Got the Guillotine!

Chicago traders flaunting that they are the one percent super rich, and mocking the 99% protests against Wall Street and banksters inside trading fraud, and immorality of the  Federal Reserve currency fiasco, and the  skewed system which makes rich richer and more powerful, and the working poor more bonded labor mired in debt slavery ,,,

See the reaction of

99% to Bankers: We’ve Got the Guillotine!

Uploaded by  on Oct 10, 2011

Watch the full Keiser Report E195 on Tusday. This week Max Keiser and co-host, Stacy Herbert, talk about Marie Antoinette’s last words on a banner at the Chicago Board of Trade,….

http://www.youtube.com/watch?v=KCP97AWXlZU

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Wall Street Mocks Protesters By Drinking Champagne 2011

Wall Street has shown Americans how they feel about protests. This video shows unidentified occupants watching protests from the balconies of Wall Street in amusement while sipping champagne. Source Channel:http://www.youtube.com/user/strugglevideomedia#p/u

http://www.youtube.com/watch?feature=player_embedded&v=2PiXDTK_CBY

Some others
Incredible Speech By Wall Street Protester “End The Fed” 2011http://www.youtube.com/my_videos?feature=mhee

Financial Armageddon Imminent 2011: http://www.youtube.com/watch?v=-Si3MaH78rk

Banker Protesters Storm Brooklyn Bridge 2011 “The Youth Are Rising”http://www.youtube.com/watch?v=A98EyKdn3gk

Wall Street Activist Owns Fox News Producer, Fox Bury Interview 2011http://www.youtube.com/watch?v=2Fcd4NAfWvw

JP Morgan actually FUNDS The New York City Police Department: Source:http://theintelhub.com/2011/10/01/jp-morgan-funded-nypd-mass-arrests-over-700…

Occupy Wall Street: Mass Economic Riots Are Now Here And America Will Never Be The Same: http://endoftheamericandream.com/archives/occupy-wall-street-mass-economic-ri…

Obama Machine Prepares To Hijack ‘Occupy Wall Street’http://www.infowars.com/obama-machine-prepares-to-hijack-occupy-wall-street/

JP Morgan Funded NYPD Mass Arrests! http://www.youtube.com/watch?v=jCDXXgtN_Ko

The Marines are Coming to PROTECT the Protestors’http://globalnoncompliance.webnode.com/news/occupywallstreet-the-marines-are-…

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See More On Federal Reserve FRAUD, Debt Crisis, Debt Slavery Bondage, etc

for instance,

Cost of GWOT and US Bankruptcy – analysis – numbers don’t lie the govn’t does

Cost of GWOT and US Bankruptcy – analysis – numbers don’t lie, but politicians do (a lot)

https://terrorismbreedsterrorism.wordpress.com/cost-of-wot-and-us-bankruptcy-%E2%80%93-analysis/

Terrorism by Economic Collapse, debt bondage, money as debt on interest, etc

https://terrorismbreedsterrorism.wordpress.com/terrorism-topics/terrorism-by-economic-collapse/

Hedge Hogs; Gold Man’s Sacks; “financial terrorist attacks;” and the Obama sellout:

HERE

and

SUPER COMMITTEE BIG BANK ROBBERY and “this sucker” going down Part ONE

HERE

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Occupy Wall Street protests and ‘The Decline of the West’

TYRONE SIU/REUTERS – Occupy Wall Street protests have spread as far as Hong Kong, where protesters said they were planning a demonstration against bureaucracy and capitalism.

By Robert Monks, Published: October 10

This piece is part of an On Leadership roundtable on the Occupy Wall Street protests.“Money is overthrown and abolished by blood.”

91

Oswald Spengler wrote these words more than a century ago in The Decline of the West. And while the imagery here may be a bit much, there’s something of it in the Occupy Wall Street protests.This movement profoundly threatens the legitimacy of the system on which corporate power is based, and boards of directors should be concerned.Corporations are creatures of statute. There is no Common Law of corporations, they are instruments licensed by the state originally in aid of certain public objectives. But few of these objectives are left. With the passage of time, corporate charters have lost any power to keep corporations in check. What is left? Only the pursuit of wealth. As Baron Thurlow reportedly said, “Corporations have no soul to save and no body to incarcerate.” Their charter is in the gift of the public. They have no inherent right to exist.Amidst the welter of information about executive pay, only one simple conclusion is possible: Pay is not correlated in any way with the value these leaders create for shareholders, society or any other corporate constituency. CEOs largely pay themselves, notwithstanding a raft of misnomers such as “independent compensation committee member” and “independent compensation consultant.” The system imbalances are there for all to see.Recent protests—Occupy Wall Street, of course, but also the Tea Party movement as it first began—rise out of a profound rage over unfairness in this country. The scale of this unfairness and inequity makes it hard to know where to direct that rage, to know what to do. Occupy Wall Street has the right target; but where their rage will go, nobody today knows. I am certain, though, that any alert board should be instructing their managers to do three things: admit the problem exists, take positive steps to make the corporation function fairly, and consider what other steps would address the concerns of the protests.Simple? Not quite. But necessary? You bet.If the present Occupy Wall Street protests do not create an unignorable threat, they certainly raise the prospect of one in the near future. Rage at unfairness is not easily quenched and once started can be hard to curtail. We’ve seen this time and again throughout history. Shareholders may think of themselves as victims of CEO power, asinnocent shareholders , but we need only look to the Russian and French Revolutions to see that everyone having anything to do with fallen power, or in this case “guilty corporations”, may be attacked and injured—even if, like shareholders, their only crime is doing nothing.So what should shareholders do?  They must promptly and credibly associate themselves with the protesters complaining against corporate unfairness—and then present themselves as legitimate vehicles for addressing the problem. The autocratic power of CEOs is fundamentally at odds with the sustainable functioning of corporations in a democratic society. Institutional shareholders must move quickly and decisively. They should defend and legitimate their right to own property and to be responsible for corporate conduct.The day is long past when satisfactory growth in market values, and some regard to  corporations’ public and social responsibilities, is enough. If our system of democratic capitalism is to survive, shareholders must be equally concerned with protecting and preserving the system itself. This involves far more than an increased emphasis on “public relations” or “governmental affairs”—two areas in which fiduciary organizations long have invested substantial sums. It’s time for institutional investors to step up and honorably confront the corporate failure to fulfill fiduciary responsibility to beneficiaries and to deal openly with the conflicting interests within their own organizations.Boards, watch the protests and understand that your dominance of the system cannot continue. And shareholders, vigorously support the protests and use them as a starting point to become active owners, to call boards and CEOs to accountability, and to take responsibility for our system of democratic capitalism.Robert Monks is the author of Corpocracy and The New Global Investors, and is known for his work as a shareholder activist and writer on corporate governance issues.Like On Leadership? Follow us on Twitter and Facebook.Read more:Heather Gautney: What is Occupy Wall Street? The history of leaderless movementsAlaina Love: What Occupy Wall Street demands of our leadersRobert Monks: Occupy Wall Street and ‘The Decline of the West’

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Occupy All Streets

by James Keye / October 9th, 2011

You who want to know that the Occupy Wall Street protests are about and what the ‘demands’ are had best reflect on the old saw, “Be careful what you ask for; you just might get it.”; get it?  And come on, you know what these people want; they want the banking/financial types (individual and collective royalty) to be made to stop using their power to dominate and control, for their own enrichment, the lives of the nation’s millions of citizens.  Here are the possibilities in a nutshell:

1) The banking/financial community get it – that they have gone too far – and begin to listen to the masses along with making real changes in their behavior.  The masses are empowered, and just possibly some balance could be struck that would hold for a time.  This option has the variation that the financial powers attempt to appear to follow such a course while actually supporting the removal of protest leaders, various divide and conquer strategies and all while offering seeming concessions.  This would lead to an optional version of the second possibility.

2) The banking/financial community use their influence to bring the media and enforcement communities down on the heads of the protestors, the protests wither and the elite grazing on the amber waves of the masses and fruited plain of middle class desires continues unabated.  Of course, the protests would not be ended, but would go into a new phase, more circumspect, more guided by their own kinds of excesses; the country divided along increasing numbers of fracture lines.

3) The banking/financial community could attempt to crush the protests either directly or indirectly and end up only shaking more ripe fruit from the tree of discontent.  The demands of a crowd are always more concrete than the thoughtful machinations of the labor negotiator.  The desire to not be mistreated by an economic elite can, in the movement of the crowd, become a nasty affair; then a very simple form of the demand might be expressed as the great unwashed drag the plutocrats from their aeries to join the crowds for a more face-to-face explanation of grievances.

(There is a forth option involving a reasonably competent and independent polity, but since neither of these conditions obtain, there is no point in considering it.)

Thus far a mild form of the second option has been the choice of Wall Street and its political sycophants.  The response has been more inline with the third option, but the real power of money influence and the police state has yet to be applied.  The obvious first option will not even be considered and will, therefore, force the nearly complete capitulation of either the people or the moneyed interests.

The history is that the people have long been dominated by moneyed interests; it has become the habit to see the rich as superior people and deserving while the poor are slovenly and disreputable.  The absurdities of such habits of thought are seldom given voice.  Evidence is accumulating that the rich, as a class, are less like the human species than the masses, but as interesting as the research is, it has always been obvious that people who would ruin the lives of others to gain wealth are different from normal people.1

In the close-knit communities in which humanity formed, such people were obvious and useful, just as any number of human styles were useful.  Their ways of thinking and acting were moderated by community habits of collective values.  It is exactly that dynamic that we play out today, but on a much different level and by quite different standards.  Today such human styles are sociopathic and psychopathic, that is, they are allowed, by the form of our societies, to express without the modulating influences of community; without guidance such ways of organizing a life experience creates monsters.

John Paulson, of hedge fund infamy, is not a serial killer, but, with carefully planned intent, his financial scheme with Goldman Sachs destroyed the financial security of thousands, perhaps millions of people, literally stealing from them billions of dollars and passing any obligation for repair onto the very people cheated.  In a stunning admission of relationship, the Godmother of veneration for such maneuvering, Ayn Rand, had as real-life hero the psychopathic murderer, William Edward Hickman.  It would not be wild speculation that John Paulson’s actions killed, maimed and otherwise damaged thousands, and that to do such things with foreknowledge represents the behavior of a psychopath as much or more than the 2 recognized murders and various petty robberies of William Edward Hickman.

And Mr. Paulson is not alone in his privilege; there are thousands like him gathered like flies to honey around the flows and accumulations of wealth in the society.  Who they harm is not a concern to them, but it should and must be made to be a concern and that is where Occupy Wall Street comes in.

There is only one authority of final consequence, and that is the collected people.  Any narrowing of interest always disadvantages the many.  Wall Street wants to make its own rules which will, as we have seen, impoverish the people, over 90% of them anyway – not rhetorical impoverishment, but the real road to serfdom; individual worker/laborers “negotiating” with the monopolized moneyed collective on the world market of wages.  “So what if it costs $50,000 dollars a year for a family of four to live a minimum life in the USA; work for $8 an hour or forget it.”

A person would have to work 3 full-time jobs at that pay to get close to $50K; that’s 24 hours a day, 5 days a week for 50 weeks a year.  At the beginning of the Industrial Revolution wages were set so that the “savings” for capitalization could be extracted from the workers.  This was done by paying just enough to men, women and children that, when all worked, they could just put together enough to live (or not die in distressingly large numbers).  That is the “Golden Age” conditions to which our present industrialists/financiers aspire.

So, what do the Occupy Wall Street protesters want? They want their world and their lives back. No more, no less.  If we all join in and if we are ready to take the beatings that will come as the moneyed interests fight back with all the psychopathology they can muster, we will win.

Learn how to explain these things to people; become an Occupier of the Mind as well as an “Occupy Wall Street” participant no matter where it is that you might find yourself.  A million people commenting in a friendly way – and in an effective way – to the clerk in the store, with the person in line next to you, to friends, neighbors, relatives; everyone, every time, every chance: Faux News can be defeated in this way.

A few million get it, though are still a small minority, but the truth is compelling and right there coiled to spring out from the shadows.  The national media is almost saying some true things.  Some of the words still have enough meaning left in them that they can be spoken with effect.  First a thousand, then a million and then ten million speaking with the one voice of the human microphone can shake the foundations of the criminal enterprise that our financial and political system has become.  Occupy All Streets: everyone, every time, every chance.

  1. Google “psychopathology of the rich” or “corporate psychopathology” and read to your heart’s discontent.  David Sirota’s article also references some of the newest research. []

James Keye is the nom de plume of a biologist and psychologist who after discovering a mismatch between academe and himself went into private business for many years. His whole post-pubescent life has been focused on understanding at both the intellectual and personal levels what it is to be of the human species; he claims some success. Email him at: jkeye1632@gmail.com. Read other articles by James, or visit James’s website.

This article was posted on Sunday, October 9th, 2011 at 8:00am and is filed under Activism, Capitalism, Classism, Culture.

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I didn’t see this posted anywhere else here, but this is pretty big.

Activist Leah Bolger is Tweeting that the October 2011 Coalition, in Freedom Plaza in DC, has had their permit extended for four months.

NBC Washington is reporting it as well:

Authorities granted protesters a four-month extension to continue occupying Freedom Plaza in D.C., News4’s Chris Gordon reported.A deadline for protesters with the October 2011/Stop the Machine demonstration to pack up and leave Freedom Plaza came and went Monday afternoon. The protesters were given until 2 p.m. to break down their stage and other equipment after their original four-day permit expired Sunday. While the protesters cleaned the space and took down the stage where they led rallies, made speeches and played music, they didn’t leave.

At about 2 p.m. Monday, Park Police went to Freedom Plaza and requested a private meeting with protest organizers. They met at National Park Service headquarters about 4 p.m., Gordon reported. Before leaving Freedom Plaza, the organizers told the crowd they’d stay until they’re ready to leave.

The organizers returned to a round of applause when they told demonstrators that authorities offered the four-month extension, Gordon police. Park Police realized it was not in their best interests to shut the demonstrators down or make arrests, organizers said, and asked if demonstrators needed to be arrested to make their point. The organizers replied that they don’t need to be arrested over a permit issue and want their issues addressed.

As a little background, I went last night and the protesters were fully expecting arrests to occur. In my opinion, this is an extremely positive and surprising development. The police are in almost all cases part of the 99%, and having them on our side (or at least not against our side) is something that we should embrace.

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OPINION BRIEF

The ‘agent provocateur’ who infiltrated Occupy Wall Street

Among the protesters pepper-sprayed while storming a D.C. museum this weekend was a conservative aiming to “mock and undermine” the movement

POSTED ON OCTOBER 10, 2011, AT 10:24 AM
During a D.C. protest Saturday, conservative journalist Patrick Howley tried to undermine the Occupy Wall Street movement, and caused unnecessary violence in the process, according to critics.

During a D.C. protest Saturday, conservative journalist Patrick Howley tried to undermine the Occupy Wall Street movement, and caused unnecessary violence in the process, according to critics. Photo: SHAWN THEW/epa/Corbis SEE ALL 10 PHOTOS

Best Opinion:  Firedoglake, Slate, ThinkProgress

The Smithsonian’s National Air and Space Museum in Washington, D.C., was shut down Saturday after a crowd of protesters showed up to voice their opposition to U.S. drone strikes. The march was organized by an antiwar group called October 11, but was quickly joined by some members of the Occupy Wall Street offshoot Occupy D.C. Ten or so protesters tried to force their way past security and were pepper-sprayed in return. One was Patrick Howley, an editor at the conservative magazine The American Spectator, who shoved his way into the museum even after being pepper-sprayed. “As far as anyone knew I was part of this cause — a cause that I had infiltrated the day before in order to mock and undermine [it] in the pages of The American Spectator,” Howley says in his (since-modified) article. Did he step beyond the bounds of journalism?

Yes. Blame Howley for the weekend’s violence: Howley’s obvious attempt to discredit the Occupy movement wasn’t victimless, says Charlie Grapski at Firedoglake. Without his instigation, innocent tourists and bystanders probably wouldn’t have been maced. And the peaceful Occupiers in New York, D.C., and elsewhere don’t deserve the bad press. The “admitted activities of this self-proclaimed agent provocateur should be brought to the attention of federal law enforcement officials.”
American Spectator editor admits to being agent provocateur…”

No. This is the protesters’ fault, not Howley’s: This journalist didn’t egg on the protesters, says David Weigel at Slate. He simply “stumbled upon conservative media gold.” The fringe anti-war October 11 movement is trying to steal the thunder of the booming Occupy protests. “What does a protest of drones have to do with a new populist protest of income disparity and bank deregulation?” Nothing, of course. But the “ineffective, camera-hungry” bunch at October 11 “have it in them to wreck the image of the new [Occupy] movement.” All “Howley did was notice” and report on it.
“The Battle of the Air and Space Museum”

Regardless, this is activism, not journalism: “The evidence doesn’t seem to show that Howley incited protesters to do anything they weren’t already primed to do,” says Ali Gharib at ThinkProgress. But his self-professed attempt to undermine the Occupy Wall Street movement — “leading the charge of protesters,” then mocking them for not following him — simply isn’t journalism.
“Conservative writer admits ‘infiltrating’ 99 Percent Movement…”

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Occupy Wall Street

A man holds up an anti-Wall Street placard on the march to NYPD headquarters. Photograph: Stan Honda/AFP/Getty Images

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or is it over yet?

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American Fall After Arab Spring — Wall Street Protests Gain Momentum, Spread to Other U.S. Cities

New York City : NY : USA | Oct 03, 2011 at 10:36 AM PDT
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Occupy Wall Street Movement - American Fall After Arab Spring
Occupy Wall Street Movement – American Fall After Arab Spring. The movement gains momentum as it spread in other U.S. Cities.
The Wall Street Journal is planning a New York edition

NEW YORK – A leaderless but spirited anti-Wall Street protests, which has adopted the name Occupy Wall Street, not only started spreading to other U.S. cities as it entered its 3rd week but it is also gaining momentum with the passage of time. The participants are being urged by the activists to dress up as “corporate zombies” on Monday.

NY police has already arrested more than 700 participants on Saturday after they came on Brooklyn Bridge and closed down a traffic lane for hours.

“Occupy Chicago,” for instance, entered its 10th day on Sunday, a day after a linked website pushed “a huge afternoon march.”

Los Angeles is not also away from the revolution happening around. The movement “Occupy Los Angeles” started Saturday with a rally from Pershing Square to City Hall. A website linked with the movement has a motto on its top which reads:

“The revolution is happening … It’s just not in the news.”

The focal point of Occupy Wall Street movement, in Lower Manhattan, was echoing with bustle on Sunday as the participants continued to voice their frustrations with everything from “corporate greed” to high gas prices to inadequate health insurance.

It’s uncertain how long the protests will go on, or whether they will be as forceful in other cities of U.S. as in New York. Much of the activity in other cities is happening online on Facebook, same like the early stage of the New York protest.

Reference: The Wall Street Journal

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US protests spread to 847 cities

New York City : NY : USA | Oct 08, 2011 at 10:25 AM PDT
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US protests spread to 847 cities
Protestors gather near Wall Street

Anti-corruption protests in the US, which started from the Wall Street in New York, have now spread to 847 cities across the country, US activists report.

The “Occupy Wall Street” movement started its demonstrations about four weeks ago and it has continued gatherings until now.

As of Friday morning, the website “Occupy Together,” a hub for nationwide events in solidarity with “Occupy Wall Street” reported gatherings in 847 cities, Democracy Now reported.

On Thursday, activists kicked off the “October 2011” protest by occupying Freedom Plaza in Washington, DC.

Demonstrators protest against corporatism, unemployment, poverty and social inequality among other things.

They blame Wall Street practices and corporate influence on White House policies for the deepening US economic crisis.

“We need to stop investing in privatization. We need to start worrying about the 99 percent of the population. We need to start investing our money into social welfare programs,” one protester said.

The members of the Occupy Wall Street movement have vowed to stay out through winter.

Protesters use the slogan “We are the 99 percent” to call attention to the fact that they are not part of the one percent of Americans in possession of the nation’s wealth.

GoharAli is based in Karāchi, Sind, Pakistan, and is a Stringer for Allvoices.

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best-picks so far:

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Signs: The 'Occupy Wall Street' protest in Manhattan, New York, has been going on since the weekendSigns: The ‘Occupy Wall Street’ protest in Manhattan, New York, has been going on since the weekend

Athens has had meetings with its creditors this week to try to avoid that, but it’s unclear whether it will be able to dig itself out of its debt hole, even with the help the European Union and the IMF.

As Wall Street suffered its worst day of 2011 yesterday, World Bank President Robert Zoellick said a ‘steady drip of difficult economic news’ was eroding confidence in global markets.

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Which Bank Is the Worst for America? 5 Behemoths That Hold Our Political System Hostage

Saturday 22 October 2011
by: Sarah Jaffe and Joshua Holland, AlterNet | News Analysis

The economic crash led to the loss of 9 million jobs and the biggest drop in American home-ownership since the Great Depression.

Long-term unemployment, poverty and hunger have increased dramatically. People are angry. The Occupy Wall Street movement, a stand against Wall Street’s greed, excess and criminality, has captured the imagination and participation of millions across the nation and the globe.

The giant mortgage bubble and the irresponsible and corrupt practices that caused the catastrophic economic crash didn’t emerge out of thin air. They were a consequence of decades of pay-to-play politics rife with conflicts of interest; a political system awash in cash and legal pay-offs, designed to undermine the checks and balances that could have prevented the meltdown.

Many of these checks and balances were implemented during the Great Depression. How they were eroded and eventually abandoned is the story of a small group of banks, financial companies and elites involved in major conflicts of interest, revolving-door politics and backroom deal-making — all to protect the interests of the global elite at the expense of the American public.

Big Finance has a long history of working hard to deregulate the American economic system on behalf of global capitalism run amok. One of its biggest coups was the overturning of the Glass-Steagall Act, a Depression-era law that created a firewall between investment banking and the commercial banks that hold deposits and make loans.

The first victory in the quest to overturn this major protection came in 1986. Under intense pressure from Wall Street, the Federal Reserve reinterpreted a key section of Glass-Steagall, deciding that commercial banks could make up to 5 percent of their gross revenues from investment banking. After the board heard arguments from Citicorp, J.P. Morgan and Bankers Trust, it loosened the restrictions further: in 1989, the limit was raised to 10 percent of revenues, and in 1996, they hiked it up to 25 percent.

Then, according to a report by PBS’ Frontline, “In the 1997-’98 election cycle, the finance, insurance, and real estate industries (known as the FIRE sector), spen[t] more than $200 million on lobbying and [made] more than $150 million in political donations” – most of which were “targeted to members of Congressional banking committees and other committees with direct jurisdiction over financial services legislation.”

The following year, after 12 unsuccessful attempts, Glass-Steagall, which would have made the crash of 2007-2009 impossible, was finally repealed. And it was only then that the explosion of shaky mortgage-backed securities began. “Subprime” loans, which made the mortgage system so vulnerable, made up 5 percent of all mortgages in the U.S. the year before repeal, but had skyrocketed to 30 percent of the total at the time of the crash.

The Glass-Steagall act was killed by financial interests seeking to maximize deregulation. The result was a casino-like environment that almost destroyed the U.S. and global economy. The giants of Wall Street enjoyed a massive bailout courtesy of American taxpayers, and they’re still hard at work gaming the system, lobbying hard against new regulations that might avert the next bubble-led crash.

AlterNet, in partnership with the Media Consortium, looked at the five banks that exert the most influence on our democracy. Based on their size, the amount of money they spend on campaign donations and lobbying, and the number of employees who’ve gone through the revolving door into public service, or vice versa, we determined which banks have had the worst impact on the country. We’ll rank each one based on our research, and come up with the worst of the worst–the big bank that’s done the most damage to America’s economy and society.

A word of caution is in order. This report is based only on what the banks are forced to disclose. It doesn’t include lobbying by corporate front-groups like the Chamber of Commerce, and it doesn’t include the “independent” campaign spending that has exploded in the wake of the Supreme Court’s Citizens Uniteddecision, which corporations are no longer required to disclose to the public. This is a classic story of American political corruption writ large.

Meet the Big Banks

You’re no doubt familiar with Bank of America. Just recently BofA has made news because it’s been sued for $10 billion over “toxic” mortgage-backed securities, and it’s imposing an arbitrary and unfair $5-a-month fee for customers who use their debit cards. Bank of America’s on shaky ground these days and its stock price has dropped significantly, in part because of its purchase of Countrywide Financial, a mortgage lender that wrote a huge chunk of the bad mortgages that broke the economy. Still, it remains a giant company, ranked number 9 on the Fortune 500 list of largest corporations for 2011, right under General Motors and right above Ford.

BofA is the behemoth it is because the bank has taken over 13 other financial institutions since the 1990s, including US Trust, NationsBank, BayBanks, and most recently the large investment company Merrill Lynch, but it’s no longer the biggest of all. According to its most recent filings, JPMorgan Chase is the biggest financial firm in the country (it ranks number 13 on the Fortune 500, right below AT&T), with $2.29 trillion in assets. In 2010, the bank had $115 billion in revenues, and turned a neat profit of $17.4 billion. Chase is the conglomerate’s retail banking and credit branch, while JP Morgan has been the investment, asset management and private banking end of operations since the merger in 2000 of JP Morgan and Chase Manhattan. In 2008, JPMorgan Chase swallowed up Bear Stearns and Washington Mutual; despite common complaints of “too big to fail,” the big banks mostly got even bigger after the economic crisis. JPMorgan Chase is now headquartered in midtown Manhattan, many blocks north of the Occupy Wall Street encampment in the financial district.

Bank of America still has $2.22 trillion in assets even after a steep decline. Last year, it made $134 billion in revenues, and reported a loss of $2.24 billion. (The protest group US Uncut loves to point out that Bank of America received a $1 billion tax refund in 2010.) It’s headquartered in Charlotte and has branches around the country — though it may be closing up to 600 of them. Interestingly, the Democratic party will hold its 2012 convention in Charlotte, where BofA is the big dog in town.

Hot on JPMorgan and BofA’s heels in the size race is Citigroup, which just announced this week that it would be charging its depositors a $15 monthly fee if they don’t maintain a $6,000 balance in their checking accounts–yet another unfair and regressive fee, even though Citigroup isn’t exactly hurting for money. It is number 14 on the Fortune 500, with $1.91 trillion in assets, $111 billion in revenues and $10.6 billion in profits in 2010.

Wells Fargo reported profits of $12.36 billion last year, and sits at number 23 on the Fortune list, just above Procter & Gamble. The California-headquartered bank acquired Wachovia, which had itself previously absorbed First Union and the Money Store among others, in 2008, in the throes of the financial meltdown, and as of 2010 has $1.26 trillion in assets and $93 billion in revenues.

Goldman Sachs, the famed “vampire squid” in Matt Taibbi’s formulation, is the only investment bank on our list. However, no look at the corrupting influence of Big Finance would be complete without it. It’s “only” at 54 on Fortune’s list, but still higher than, among others, Intel, Chrysler and Sears, with $911.3 billion in assets and $46 billion in revenues, and profits of $8.35 billion in 2010. For many, Goldman Sachs is the face of all that’s wrong with Wall Street, stoking massive anger when CEO Lloyd Blankfein told a reporter that he was “doing God’s work.”

Meet Their Bailouts

The big banks weathered the economic crash thanks to large injections of taxpayer dollars. The original bailout plan, the Troubled Asset Relief Program, was signed into law by George W. Bush and gave direct handouts to the banks to keep them from collapsing.

Economist Dean Baker told AlterNet that Big Finance “never wanted to see the removal of the government from the market. They wanted the government to come in and bail them out.”

They were also happy to accept “government deposit insurance or the back-up lines of credit provided by the Fed through the discount window,” he said. “What the financial industry wants is to have these incredibly valuable government safeguards without restrictions on the banks’ behavior.”

Among our big five, Citigroup was the largest beneficiary of these funds, with $45 billion, but even Goldman Sachs got $10 billion. Wachovia/Wells Fargo and JPMorgan got $25 billion each, while Bank of America got $30 billion. According to ProPublica’s calculations, the big five have all paid back their TARP funds.

But TARP was only one way in which the federal government subsidized the big banks. The Federal Reserve also handed out trillions in unsupervised loans during the so-called crisis period.

Dean Baker noted in his book False Profits that the Fed loans were actually more significant than the bailouts. “The vote on the TARP was a way to get Congress’s fingerprints on the policy of subsidizing the banks,” he wrote, “just as the war authorization bill approved in October 2002 implicated Congress in President Bush’s subsequent decision to wage war on Iraq under false pretenses.”

And if those numbers weren’t big enough, just this August Bloomberg reported even more secret Fed loans to the big banks: “The $1.2 trillion peak on Dec. 5, 2008 — the combined outstanding balance under the seven programs tallied by Bloomberg — was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.”

These staggering numbers in direct bailouts and loans don’t even take into account the other ways in which these banks benefited from federal handouts: loans to other banks that were used to pay back debts to the big five; government support for consolidation, making the too-big-to-fail banks even bigger. For instance, in addition to its own bailout funds, Goldman Sachs got $12.9 billionfrom the funds the government used to bail out insurance giant/seller of derivatives AIG.

“Without question, direct government support was critical in stabilizing the financial system, and we benefitted from it,” Goldman’s Lloyd Blankfein said.

Campaign Donations

The big banks are some of the biggest donors to political campaigns in the country. Yet, when you compare what they spend on candidates to what they got in bailouts, it’s pennies on the dollar. In other words, it’s a worthwhile investment to spend money on candidates.

Corporations can’t give money directly to politicians running for federal office. They get around that sticking point in several ways. First, they can donate to campaigns through their political action committees (PACs). (A corporation can’t fund its PACs from its revenues directly; it can create a PAC, pick up its administrative costs, and then solicit contributions from the company’s executives and shareholders.) But corporate PACs can give no more than $5,000 a year to a given federal candidate.

Another way is through the use of what’s known as “soft money.” Soft money is used to build party infrastructure or to buy political ads that are produced independently from a campaign. Soft money ads are ostensibly used to educate voters about various issues, but they often look exactly like campaign ads that convey a clear message of whom a voter should or shouldn’t support.

“Bundling” is another way corporations inject money into politics. There are limits on how much an individual can give to a candidate for federal office, so wealthy donors seek out contributions from friends, family and business associates, and “bundle” them into large pots of cash. In exchange, they usually become part of a club – like the Bush “Rangers” – and get invited to insiders’ events where they have plenty of opportunities to influence a candidate.

OpenSecrets.org‘s list of the top all-time political donors from 1989 to 2012 includes contributions from individuals associated with a company, from Corporate PACs and soft money through 2010 (more on that below). Where do the banks stack up? Goldman Sachs is number 25, five slots higher than the National Rifle Association. It also spends more on candidates than the American Hospital Association, the AFL-CIO and defense contractor Lockheed Martin. Citigroup (number 39 on the list, just above Microsoft), JPMorgan Chase (number 46, just below Blue Cross/Blue Shield) and Bank of America (number 50) are all heavy hitters. Of our big-spending financial institutions, only Wells Fargo didn’t make the cut for the top 50.

As far as corporate PACs alone, Bank of America leads among commercial banks this election cycle, despite – or perhaps because of – its struggles, having already spent $249,500 on candidates for 2012–$153,000 of that on Republicans. Wells Fargo and JPMorgan Chase are close on its heels, with $171,500 and $166,499 respectively, and they both follow the trend, in 2012, of leaning Republican. (The finance industry as a whole gives about 69 percent of its donations to the GOP). Citigroup’s PAC donated $56,000 thus far for 2012. And Goldman Sachs leads the pack among investment banks this cycle, having already shelled out nearly $300,000.

Just who are the recipients of all this largesse? There are many, but most play key roles on Congressional committees that oversee their businesses. Consider just one example: Senator Chuck Schumer, D-New York, one of the most powerful members of Congress (Schumer is known as “the senator from Wall Street”).

According to the National Journal’s rankings, Schumer is tied with two others as the 10th “most liberal” member of the upper chamber. But he owes his career to Wall Street. As Salon editor Steve Kornacki noted, in the early 1980s, when he was a little-known back-bencher in the House, Schumer managed to get himself a seat on the House Banking Committee, and immediately “set about making friends on Wall Street, tapping the city’s top law firms and securities houses for campaign donations.” “I told them I looked like I had a very difficult reapportionment fight. If I were to stand a chance of being re-elected, I needed some help,” he would later tell the Associated Press.

Wall Street would continue to have his back as his career progressed. According to Open Secrets, between 2007 and the current cycle, Schumer raked in $3.9 million from the securities, banking and insurance industries – over 20 percent of all his fundraising. He has raised more from Wall Street than any other lawmaker over the last two years. Over the course of his political career, the securities and investment industries are his top contributors; the four most generous institutions during his time in the Senate have been Goldman Sachs, Citigroup, Morgan Stanley and JPMorgan Chase, in that order.

The ostensibly liberal senator from New York, who sits on the Senate Finance and Banking, Housing and Urban Affairs Committees – and chairs the all-important Committee on Rules and Administration (which deal with, among other things, lobbying restrictions) – has returned that friendship consistently.

Although he voted for the Dodd-Frank financial reform bill in 2010, earlier this year, he joined several other lawmakers in a letter urging federal legislators not to adopt new regulations on derivatives, arguing that they would “inevitably result in significant competitive disadvantages for U.S. firms operating globally.” He voted to extend the Bush tax cuts on capital gains in both 2005 and 2006.

In 2008, the New York Times analyzed Schumer’s voting record, and found that he has consistently sided with Wall Street on issue after issue, often crossing the aisle to do so.

That’s just Congress. The presidential election in 2012 will be the most expensive in history; Barack Obama has already raised over $89 million for his reelection, while his GOP opponents are raising and spending boatloads of cash as well.

The banking industry is by and large leaning more Republican for 2012 than it did in 2008 (This only includes direct contributions to the campaigns; it doesn’t include money Obama has raised for the Democratic National Committee, which will help support his re-election efforts). Through the 2nd quarter of 2011, the Obama campaign has only raised $857,000 from the securities and investment industries, $44,750 from Goldman Sachs, the only one of our top five to make it onto OpenSecrets’ top contributors’ list.

Two of Obama’s top bundlers are also connected to Goldman Sachs. Vicki Heyman has brought in between $100,000 and $200,000 for Obama, according toOpenSecrets, and David Solow between $50,000 and $100,000. (In comparison, by the end of the 2008 election, Obama had gotten $1,013,000 from Goldman Sachs, $808,000 from JPMorgan Chase and $736,000 from Citigroup.)

Mitt Romney is the clear favorite candidate of Wall Street this year, having taken in $2,339,588 from securities and investment companies. Goldman Sachs is the top contributor to Romney’s campaign, having given $293,250 between political action committees, employees and their families. Bank of America has kicked in $59,000, Wells Fargo and JPMorgan around $45,000 each and Citigroup brings up the rear with $33,000.

Wells Fargo tossed a few thousand to Newt Gingrich and Herman Cain as well. It’s always good to cover one’s bases.

We should note that this report, like all others on this topic, is necessarily incomplete. Corporations don’t like airing their campaign spending in public, and there are two ways they can and do avoid it.

First, corporate front-groups like the Chamber of Commerce effectively “launder” corporate campaign cash, keeping a company’s fingerprints from appearing on lobbying and campaign disclosure reports. The Chamber is not required, and does not disclose its members, but according to Think Progress, “several confirmed Chamber members are banks which were bailed out by taxpayers.” These include Citigroup, Marshall & Ilsley Bank and the New York Private Bank & Trust. According to Americans for Financial Reform, Bank of America, JPMorgan, Morgan Stanley, PNC Financial Services and M&I Bank are also Chamber members.

Prior to the Supreme Court’s 2010 ruling in Citizens’ United v. FEC, there were limits on corporations’ (and unions’) independent expenditures and on “electioneering communications” – ads that explicitly call for the election or defeat of a candidate before an election. All campaign spending had to come from individual execs and shareholders or be funneled through corporate PACs. But the decision changed the entire landscape, allowing corporations and unions to spend unlimited dollars on politics, directly from their treasuries and without the disinfecting light of disclosure. Following the decision, a bill that would have forced corporations to disclose these donations had enough bipartisan support for passage, but a vote on the measure was blocked three times by Senate Republicans.

Lobbying

After the economic crisis, one might have expected the big banks to have less money to spend on lobbying. But financial reform was on Washington’s agenda, so the bankers coughed up the cash for lobbyists in an effort to make sure the final result wasn’t too hard on them or their bottom line. The lobbying numbers for all five of the banks in our report went up dramatically in recent years, starting their dramatic spike in 2006 and peaking in 2010, when the Dodd-Frank financial reform bill was under consideration.

Banks have spent more than any other sector on lobbying between 1998 and 2011, and Citigroup, JPMorgan Chase, Bank of America, Goldman Sachs, and Wells Fargo were at the top, dropping $12,020,000 between them in 2011 alone. And those efforts have paid off for them, as they’ve been able to maintain most of their business practices practically unchanged since before the crash.

Their interests were clear. According to a report by the inspector general of the Troubled Assets Relief Program, the banks lobbied heavily against limitations on executive pay that legislators had tried to attach to the bailout money. They worked hard to preserve their fat bonuses, their right to virtually no oversight and their ability to continue business as usual.

Anupama Narayanswamy at the Sunlight Foundation wrote of the Dodd-Frank Wall Street Reform and Consumer Protection Act, “The Wall Street reform bill was a mammoth undertaking, consisting of more than 2,300 pages, and requiring agencies to write a total of more than 240 new regulations. With 108 new rules due to be adopted this summer on the first anniversary of its enactment, and a dozen bills introduced by Republican members to repeal the bill in whole or in part, government-relations wings of the Wall Street banks and lobbying firms in Washington, D.C., have been busy.”

Bill Allison, also at Sunlight, reported, “Since passage of Dodd-Frank, federal agencies implementing the law have logged more than 2,100 meetings with interests aiming to influence the many new rules that Dodd-Frank requires, including 83 with executives and lobbyists for Goldman Sachs, 73 with JP Morgan Chase, 58 with Morgan Stanley and 55 with Bank of America.”

The banks also lobby through the American Bankers Association, which has spent $4.6 million this year alone on lobbyists, and the Financial Services Roundtable, which the New York Times’ Ben Protess describes as “a fellow trade group that represents 100 of the nation’s largest financial firms.” These two organizations and others helped fund the slew of lobbyists fighting to keep regulators from having much of an impact on the financial sector.

The vast army of lobbyists that represent the big banks in Washington include some former power brokers from Congress; former Democratic House Majority Leader Dick Gephardt, through his Gephardt Group, got $60,000 from Goldman Sachs to argue for their cause, which according to the Center for Responsive Politics, he did personally. John Breaux, former Democratic Senator from Louisiana, also lobbies for Goldman, and his partner in the Breaux Lott Leadership Group, Trent Lott, driven out of his position as Senate Minority Leader for comments that appeared to endorse Strom Thurmond’s segregationist campaign for president, represents both Goldman and Citigroup. (Citigroup paid them $180,000 for lobbying last year, and Goldman a full $300,000, as much as General Electric.)

The Gephardt Group took in $3.2 million just last year, from Boeing, Comcast, Sodexho and many more as well as Goldman Sachs, and Breaux and Lott pocketed nearly $6 million from clients ranging from Citigroup and Delta Airlines to AT&T and defense contractor Raytheon.

Bank of America and Wells Fargo both retain the services of the Podesta Group, run by well-known Washington insider Tony Podesta, who was a founder of People for the American Way. (Podesta’s brother, John Podesta, is president of the Center for American Progress, an influential liberal DC think tank and a former Clinton chief of staff — he also headed Obama’s transition.) Wells Fargo paid the Podesta Group $340,000 in 2011, $100,000 more than Wal-Mart, another Podesta client.

While JPMorgan Chase’s lobbyist roster doesn’t have quite the pedigree of some of the others, it makes up for that in sheer spending power, having dropped $66,696,173 in lobbying dollars between 1998 and 2011. In total spending it still comes in second, though, behind Citigroup’s $82,350,000, handing it the crown for biggest spender as far as lobbying goes.

All together, the finance sector is the top spender on lobbying between the years of 1998 and 2011, according to the Center for Responsive Politics, having poured $4,631,844,938 into lobbyists’ pockets. $230,200,953 of that came directly from the five banks surveyed here.

And what did they get for all that money? Nomi Prins, a former managing director at Goldman Sachs and author of the new book Black Tuesday, explained to AlterNet:

“The Dodd-Frank Bill contains a slew of minor, cosmetic adjustments to the status quo manner in which the largest banks operate, and even they are being battled against by the financial industry lobbyists. The bottom line is that this bill does not fundamentally alter the structure of Wall Street – it does not separate banks cleanly, or in any other way remotely reminiscent of the Glass-Steagall Act of 1933, into commercial banks that deal with the basics of deposit and lending operations vs. investment banks that create dangerous and complex securities and leverage them into all manner of speculative activity.

She continued, “Even though the bill calls for a consumer financial protection agency, it should be noted that such a department existed already within the Fed during the build-up to this crisis, that by virtue of political weakening and position within the Fed and political hierarchy was rendered ineffective in practice. The bill does not end the conflicts of interest and the revolving doors between the regulatory bodies and other key positions in Washington vs. those coming from, or going to, Wall Street.”

Revolving Door

Perhaps the most alarming aspect of the financial industry’s influence on our political system is the extent to which financial insiders end up in positions where they’re actually making policy.

The “revolving door” works both ways. According to Open Secrets, fully 74 percent of registered lobbyists for the finance and insurance industry previously worked in government, many of them for members of Congress sitting on committees that set banking regulations, or for the regulatory agencies that enforce them.

The nuts and bolts of legislation is crafted by Congressional staffers, and in the Senate, the Finance Committee (117) is second only to the Judicial Committee (119) in the number of staffers-turned-lobbyists or lobbyists-turned-staffers.

Building relationships as an elected official, regulator or legislative staffer can later bring rich financial rewards when one moves to the private sector. Economists Jordi Blanes Vidal, Mirko Draca and Christian Fons-Rosen tried to figure how much those relationships were worth in a 2010 study conducted for the Center for Economic Performance (PDF). Using disclosure forms, they looked at how former staffers-turned-lobbyists’ income changed when their former bosses left Congress. The researchers found “evidence that the existence of a powerful politician to whom the lobbyist is connected is a key determinant of the revenue that he or she is able to generate… in other words, lobbyists are able to ‘cash in on their connections,’ since connections are an asset with a separate value to their experience, human capital or general knowledge of how government works.”

Specifically, they found that when a senator left office, their former staffers-turned-lobbyists saw their incomes drop by an average of 24 percent and when members of the House left office, their old staffers’ incomes dropped by 10 percent. But those are the averages. They also found, “Consistent with the notion that lobbyists sell access to powerful politicians,” that lobbyists lost more revenue if their departing ex-bosses were more senior and held powerful committee assignments.

As you can see in the graphic below, Citigroup leads through Congress’ revolving door, followed by JPMorgan Chase, Bank of America, Wells Fargo and followed up by Goldman Sachs, according to Legistorm’s database.

Lobbyists who worked for members of Congress or were themselves legislators

20

Including Sanders Larsen Adu, former staff director of a House Financial Services subcommittee, Tim Keeler, former staffer on the Senate Finance Committee (Keeler has also lobbied on behalf of BofA and JP Morgan Chase, among others) and Chris Rosello, a former staffer on the House Financial Services Committee.

81

Including former Senator John Breaux, D-Louisiana, who was a senior member of the Senate Finance Committee, and chairman of the Subcommittee on Social Security and Family Policy.

72

Including former Rep. Rick Lazio, R-NY, who served as Deputy Majority Whip, Assistant Majority Leader, and chairman of the House Banking Subcommittee on Housing and Community Opportunity.

39

Including, until recently, Senator Dan Coats, R-Indiana, who served in the Senate until 1999, retired to lobby his former colleagues and serve a stint as ambassador to Germany, and then returned to the Senate this year. The New York Times reported that Coats, lobbying for Cooper Industries, “served as co-chairman of a team of lobbyists in 2007 who worked behind the scenes to successfully block Senate legislation that would have terminated a tax loophole worth hundreds of millions of dollars in additional cash flow” for the company. Coats curently sits on the Joint Economic Committee.

18

Including former Rep Dick Gephardt, D-Missouri and former Rep. Harold Ford, Sr., D-TN. Gephardt served as the House Majority leader; Ford sat on the House Banking Committee.

The revolving door between Wall Street and government doesn’t just lead into and out of Congress. Consider the circuitous career path taken by former White House Chief of Staff Joshua Bolten. Bolten graduated with a law degree in the early 1980s, and between 1985 and 1989, he bounced between the Office of the U.S. Trade Representative, the law firm of O’Melveny & Myers, which represents Goldman Sachs — and is a registered lobbyist for Citigroup, according to Legistorm ($$) — and the Senate Finance Committee.

After a brief stint in the first Bush administration, Bolten went over to Goldman Sachs, where he served as executive director of legislative affairs for five years. Then he became policy director on George W. Bush’s 2000 campaign. After the election, he worked his way up from assistant to the president to director of the Office of Management and Budget and, finally, to White House Chief-of-Staff, which some believe to be the second most powerful position in the government. In that role, he was credited with recruiting then-Goldman CEO Henry Paulson to head up the Treasury Department, where he would preside over the bank bailouts – much to Goldman’s benefit. After leaving the White House, Bolten got a cushy sinecure as the John L. Weinberg/Goldman Sachs & Co. Visiting Professor at Princeton.

It’s an exceptional career, but not an unusual story. Robert Rubin, Bill Clinton’s Treasury Secretary, was vice-chairman at Goldman before helping to orchestrate the deregulation of just the kinds of complex financial instruments that took down the economy. After his stint at Treasury, Rubin landed at Citigroup, where he raked in $128 million over the course of eight years. In 2008, as the financial sector was teetering on the brink of collapse – and just after Citi had written down $24 billion in losses due in large part to, as Fortune put it, “greed, cynicism, and bad judgment” — Rubin downplayed the mess he’d helped create, saying it was “all part of a cycle of periodic excess leading to periodic disruption.” He blamed the crash “on just about everyone but the major U.S. financial players.”

The Obama White House is no exception to the rule. Last spring, Politico reported that Rubin, who “watched his reputation as an economic titan shatter after he left the Clinton White House…still wields enormous influence in Barack Obama’s Washington, chatting regularly with a legion of former employees who dominate the ranks of the young administration’s policy team.”

Lewis Alexander went from the Federal Reserve to the Commerce Department and then did a stint at Citi before returning to politics as a counselor at the Treasury Department, and Maura Solomon went from the Office of Thrift Supervision, one of the bank regulators, to Citigroup, where she is presumably better compensated. And so, of course, did Peter Orzsag. Jacob J. Lew, who replaced Orzsag at the Office of Management and Budget (an office he also held under President Clinton), spent his time between those appointments as executive vice president of New York University and then at Citigroup. Gary Gensler, a former assistant secretary of the Treasury who spent 18 years at Goldman Sachs, now oversees the Commodity Futures Trading Association.

According to the Project on Government Oversight (POGO), the Securities and Exchange Commission – the primary agency for policing the financial industry – is inundated with former bankers. POGO’s database of lobbyists includes, “219 former SEC employees [who] filed 789 statements between 2006 and 2010 announcing their intent to appear before the SEC or communicate with its staff on behalf of private clients.”

“Many former SEC employees leave the agency to join [lobbying] firms that represent clients in the securities industry. Several recent reports by the SEC Inspector General have raised troubling questions about whether the promise of future employment representing Wall Street causes some SEC officials to treat potential employers and their clients with a lighter touch.”

Social Costs

Does anyone need to be reminded how the big banks broke the economy and then pocketed billions of tax dollars in bailouts? Have people already forgotten Henry Paulson (Treasury Secretary, 2006-2008; Goldman Sachs, 1974-2006) standing before Congress and demanding $700 billion in nearly oversight-free money to buy up the banks’ “toxic assets”—which were, of course, bad mortgages packaged into securities that were suddenly worthless. The bailouts received bipartisan support, and Obama pressed for the passage of what eventually became TARP, proving the value of those bipartisan campaign donations.

Perhaps you are underwater on your mortgage because of the crash in home values after the popping of the housing bubble, which was created by the insatiable need for profits, for more mortgages to package into securities to sell on the market. Perhaps you’re dealing with Bank of America or another one of the banks that are still unwilling to modify the majority of mortgages, continuing to foreclose on homes and throw families out.

Or perhaps you rent, but are unemployed. Perhaps you have a job but haven’t seen a raise since the crash, or have been pressured to put in more hours. The core problem in the brick-and-mortar economy is a lack of demand, and that drop in demand is a result of the $14 trillion in household wealth lost in the crash that Wall Street’s gamblers precipitated — from stocks and bonds, real estate values and retirement accounts. The popping of the housing bubble alone and the corresponding drop in home values, according to Dean Baker, creates the loss of some $8 trillion in wealth, or $110,000 per homeowner.

The size of the financial industry alone is worrisome. As Katrina vanden Heuvel pointed out at the Washington Post, “Obama has said that we can’t go back to an economy where the banks make 40 percent of all corporate profits. But the big banks are emerging from the crisis more concentrated than ever, and financial sector profits are already up to nearly 30 percent of total corporate profits.” Banking, like trucking, is known as an “intermediary good” — nothing is produced by the industry – and if any other intermediary good represented around 10 percent of the U.S. economy, people would consider that a major problem.

To create those complex financial instruments, finance has begun to cannibalize the “best and brightest” college graduates–or at least those looking for the fattest paychecks, whether purely out of greed or a need to pay off heavy student loan burdens (often owed to the same banks).

Pat Garofalo at Think Progress noted that “The four biggest banks issue 50 percent of mortgages and 66 percent of credit cards: Bank of America, JPMorgan Chase, Wells Fargo and Citigroup issue one out of every two mortgages and nearly two out of every three credit cards in America.” Not only that, but he also pointed out that the five banks we’ve tracked here are the ones that control 95 percent of the derivatives in the country–the complex financial instruments that investor Warren Buffet called “financial Weapons of Mass Destruction.”

Perhaps the most pernicious effect of Wall Street’s influence is yet to come. By watering down or killing off new regulations designed to prevent the next bubble-induced meltdown, they imperil future generations’ prosperity just as they did when they lobbied hard to kill financial regulations in the 1990s–resulting in, to give one example, the passage of the Commodity Futures Modernization Act in 2000, which kept derivatives and credit default swaps unregulated and allowed the banks to keep gambling without oversight.

The banks have simply gotten too powerful; ”too big to fail” has become too big to regulate. Yet, even as they grow, spend on lobbying and campaigns and institute fees, they represent a giant ticking time bomb at the heart of our economy.

It can be difficult to gauge which of the big banks has had the greatest negative impact on society, as so many of the problems were created by the combined practices of the entire industry. Bank of America stands out for its sheer size. It is the country’s biggest bank, controlling 12 percent of the nation’s deposits, and 20 to 25 percent of the mortgage market (and a huge chunk of its mortgage fraud as well). While it continues to face lawsuit after lawsuit for fraudulently selling securities — from both the government and private companies — its plummeting stock price is bringing it ever closer to collapse. What’s the endgame if America’s largest bank runs out of money? If ever a bank was too big to fail, it is Bank of America.

Robert Kuttner, co-founder of the American Prospect, wrote of the prospect of the giant going under:

“Worst of all would be to let a large institution like Bank of America just fail. Outside of the hard-core Tea Party right, nobody supports this.

“The second worst policy would be to just keep throwing money at a zombie institution to keep up the pretense that it is solvent. We tried that policy in 2008 and 2009. It helped entrenched bankers keep their jobs and their outsized profits, but a wounded banking system continued to be a lead weight on the rest of the economy.”

Bank of America is no doubt the biggest lead weight on the economy right now, and its zombie status keeps everyone wondering what the endgame will be. One of the things that was included in the Dodd-Frank bill was a provision that would allow the FDIC to take failing banks into receivership, seize them, break them up and reorganize them. The question is, will an administration that’s proven unwilling to make any serious changes to the financial industry take that step? Or will it instead bail out BofA yet again — a step that Kuttner warns could be a political and economic disaster.

Even with all this, it’s hard to rank the banks in this category. Citigroup just last weekend had 24 people arrested for criminal trespass in New York City when they attempted to close out their accounts, and is hiking fees while its profits soar. JPMorgan’s purchase of the failing Washington Mutual was nearly as toxic as Bank of America’s purchase of Countrywide, taking over more fraudulent loans. Goldman Sachs has tentacles in absolutely everything; Wells Fargo has some of the worst predatory lending practices to people of color. It’s clear that the social costs of the banking industry as a whole are simply too big to bear.

And the Winner Is…

Ranking the big banks isn’t an easy task. Sure, it’s easy enough to add up the size of the bailouts and the amount spent on campaign donations, or the number of people who’ve spun through the revolving door. It’s harder to gauge the impact on millions of people as the economy collapsed and continues to sputter. And the story of lobbyists and well-placed former employees isn’t just one of numbers, but of influence and success.

Still, when we looked at all of our research, there was one bank that came in first in two categories, and second in another. That bank is Citigroup. It was the clear winner in lobbying spending with $82,350,000, has the most former politicians, executives and lobbyists spinning through its revolving door, and followed only Goldman Sachs in terms of measurable campaign donations.

It’s the current employer of former Office of Management and Budget chief Peter Orszag and former employer of ex-Treasury Secretary Robert Rubin, the donor of nearly $17 million to campaigns Republican and Democratic, and the recipient of $45 billion in TARP funds.

Of course, one could make an argument for nearly every bank on this list. Goldman Sachs far outspends the others on campaign donations, and Citi might have won the overall lobbying spending race but has been outspent in the past few years by JPMorgan Chase–by nearly $3 million. And Bank of America’s snowballing legal troubles seem evidence enough of malfeasance.

What is clear, any way you slice it, is that the big banks have far too much influence over our politics, and it has enabled them to gain far too much influence over our entire economy.

We are living with the results: real unemployment in the double digits, falling incomes, skyrocketing debt. What can we do about it? With the banks’ deep connections to both parties in Washington, it has long seemed that reining them in is an uphill battle. Yet Wall Street appears to have over-reached, and we’re now seeing the blow-back as tens of thousands of people join the Occupy Movement in cities and towns across the country and across the world. Americans are tired of the reign of the big banks, and they’re coming together to do something about it. People are moving their money to credit unions, they’re fighting to keep families in their homes and they’re taking their anger directly to the Titans of Wall Street. Most importantly, they’re building a people-powered movement to hold the banks accountable, and if history is any guide, once united in a cause, the American people usually win.



Sarah Jaffe
Sarah Jaffe is an associate editor at AlterNet, a rabblerouser and frequent Twitterer. You can follow her at @seasonothebitch>

A Tightly Knit Network of Companies Runs the World Economy, Says Network Analysis

By Rebecca Boyle Posted 10.20.2011 at 1:38 pm 15 Comments

The Global Super-Entity Ownership ties among transnational corporations show a cluster of 147 companies can exert enormous power over global corporate networks. Most are financial institutions. S. Vitali, J.B. Glattfelder, and S. Battiston

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The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue (Image: PLoS One)

Full size image

The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue (Image: PLoS One)

Revealed – the capitalist network

that runs the world

AS PROTESTS against financial power sweep the world this week, science may have confirmed the protesters’ worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.

The study’s assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.

The idea that a few bankers control a large chunk of the global economy might not seem like news to New York’s Occupy Wall Street movement and protesters elsewhere (see photo). But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world’s transnational corporations (TNCs).

“Reality is so complex, we must move away from dogma, whether it’s conspiracy theories or free-market,” says James Glattfelder. “Our analysis is reality-based.”

Previous studies have found that a few TNCs own large chunks of the world’s economy, but they included only a limited number of companies and omitted indirect ownerships, so could not say how this affected the global economy – whether it made it more or less stable, for instance.

The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company’s operating revenues, to map the structure of economic power.

The work, to be published in PloS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What’s more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world’s large blue chip and manufacturing firms – the “real” economy – representing a further 60 per cent of global revenues.

When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

John Driffill of the University of London, a macroeconomics expert, says the value of the analysis is not just to see if a small number of people controls the global economy, but rather its insights into economic stability.

Concentration of power is not good or bad in itself, says the Zurich team, but the core’s tight interconnections could be. As the world learned in 2008, such networks are unstable. “If one [company] suffers distress,” says Glattfelder, “this propagates.”

“It’s disconcerting to see how connected things really are,” agrees George Sugihara of the Scripps Institution of Oceanography in La Jolla, California, a complex systems expert who has advised Deutsche Bank.

Yaneer Bar-Yam, head of the New England Complex Systems Institute (NECSI), warns that the analysis assumes ownership equates to control, which is not always true. Most company shares are held by fund managers who may or may not control what the companies they part-own actually do. The impact of this on the system’s behaviour, he says, requires more analysis.

Crucially, by identifying the architecture of global economic power, the analysis could help make it more stable. By finding the vulnerable aspects of the system, economists can suggest measures to prevent future collapses spreading through the entire economy. Glattfelder says we may need global anti-trust rules, which now exist only at national level, to limit over-connection among TNCs. Bar-Yam says the analysis suggests one possible solution: firms should be taxed for excess interconnectivity to discourage this risk.

One thing won’t chime with some of the protesters’ claims: the super-entity is unlikely to be the intentional result of a conspiracy to rule the world. “Such structures are common in nature,” says Sugihara.

Newcomers to any network connect preferentially to highly connected members. TNCs buy shares in each other for business reasons, not for world domination. If connectedness clusters, so does wealth, says Dan Braha of NECSI: in similar models, money flows towards the most highly connected members. The Zurich study, says Sugihara, “is strong evidence that simple rules governing TNCs give rise spontaneously to highly connected groups”. Or as Braha puts it: “The Occupy Wall Street claim that 1 per cent of people have most of the wealth reflects a logical phase of the self-organising economy.”

So, the super-entity may not result from conspiracy. The real question, says the Zurich team, is whether it can exert concerted political power. Driffill feels 147 is too many to sustain collusion. Braha suspects they will compete in the market but act together on common interests. Resisting changes to the network structure may be one such common interest.

The top 50 of the 147 superconnected companies

1. Barclays plc
2. Capital Group Companies Inc
3. FMR Corporation
4. AXA
5. State Street Corporation
6. JP Morgan Chase & Co
7. Legal & General Group plc
8. Vanguard Group Inc
9. UBS AG
10. Merrill Lynch & Co Inc
11. Wellington Management Co LLP
12. Deutsche Bank AG
13. Franklin Resources Inc
14. Credit Suisse Group
15. Walton Enterprises LLC
16. Bank of New York Mellon Corp
17. Natixis
18. Goldman Sachs Group Inc
19. T Rowe Price Group Inc
20. Legg Mason Inc
21. Morgan Stanley
22. Mitsubishi UFJ Financial Group Inc
23. Northern Trust Corporation
24. Société Générale
25. Bank of America Corporation
26. Lloyds TSB Group plc
27. Invesco plc
28. Allianz SE 29. TIAA
30. Old Mutual Public Limited Company
31. Aviva plc
32. Schroders plc
33. Dodge & Cox
34. Lehman Brothers Holdings Inc*
35. Sun Life Financial Inc
36. Standard Life plc
37. CNCE
38. Nomura Holdings Inc
39. The Depository Trust Company
40. Massachusetts Mutual Life Insurance
41. ING Groep NV
42. Brandes Investment Partners LP
43. Unicredito Italiano SPA
44. Deposit Insurance Corporation of Japan
45. Vereniging Aegon
46. BNP Paribas
47. Affiliated Managers Group Inc
48. Resona Holdings Inc
49. Capital Group International Inc
50. China Petrochemical Group Company

* Lehman still existed in the 2007 dataset used

Graphic: The 1318 transnational corporations that form the core of the economy

(Data: PLoS One)

source HERE

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Wall Street Bonuses vs. Normal Pay

Beginning in the 1990s, Wall Street bonuses began to take off, and were downright astronomical by 2006. And even when Wall-Street bonuses dipped during the financial crisis, they still did not, according to this chart, come anywhere near worker’s annual salary.

Wall Street Bonus image

Over-Reliance On The Financial Sector

Beginning in the 1980s, as this chart from 13 Bankers by Simon Johnson and James Kwak illustrates, the financial sector’s profits began to wildly outpace profits in the nonfinancial sector. When the 2008 crisis hit, the financial sector’s profits plummeted, briefly falling below the nonfinancial sector. But they’ve since rebounded to pre-crisis levels — that is, it’s back to “business as usual,” says James Kwak.
Financial Sector image

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How Banks Make Money

Creating Money Out of Thin Air
posted Jul 07, 2009

Yes, the government prints our paper money. But that’s only a small fraction of the money in use. Most of the money in national economies is created when banks write it into their customers’ accounts out of thin air as bank loans.

YES! Magazine graphic: How Banks Create Money Out of Thin Air

You earn $100 and put it in the bank. And then…

The bank keeps $10 in its Federal Reserve account …
This is the “reserve,” which the bank uses when customers withdraw funds. As a rule, depositors don’t take out more than 10% of the money they have on deposit on any given day.
YES! Magazine graphic: How Banks Create Money Out of Thin Air

Then loans Susie $90, at interest.
YES! Magazine graphic: How Banks Create Money Out of Thin Air

Susie deposits the $90 in her bank.That bank keeps 10% ($9) in reserve and loans Joe $81, at interest.
YES! Magazine graphic: How Banks Create Money Out of Thin Air

See how it all adds up—for the banks.
You now have $100 in your account. Susie has $90 in hers. Joe has $81.There’s now $271 total in accounts that you and Susie and Joe can spend, and it all came from your $100 deposit. The banks have created an additional $171 by loaning it into existence.

Imagine this money trick over and over.
If you do this operation 50 times, that $100 turns into $995.25—$885.25 in loans, and your original $100.
YES! Magazine graphic: How Banks Create Money Out of Thin Air
Mad math: If those loans are for one year at 10% interest, the banks will make $88.53. If they’d only been able to loan your $100, they’d make $10.

2009 YES! MAGAZINE GRAPHIC


This article first appeared as part of The New Economy, the Summer 2009 issue of YES! Magazine.

Interested? James Robertson on how money should be a public service, not a cash cow for banks

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Wall Street Isn’t Winning – It’s Cheating

POSTED: October 25, 9:26 AM ET

Read more: http://www.rollingstone.com/politics/blogs/taibblog/owss-beef-wall-street-isnt-winning-its-cheating-20111025#ixzz1c2Pvt5fj

POSTED: October 25, 9:26 AM ET

occupy wall street london sign

A protestor’s sign expresses the sentiment of the Occupy Wall Street movement at a Occupy Wall Street protest in London.
BEN STANSALL/AFP/Getty Images

I was at an event on the Upper East Side last Friday night when I got to talking with a salesman in the media business. The subject turned to Zucotti Park and Occupy Wall Street, and he was chuckling about something he’d heard on the news.

“I hear [Occupy Wall Street] has a CFO,” he said. “I think that’s funny.”

“Okay, I’ll bite,” I said. “Why is that funny?”

“Well, I heard they’re trying to decide what bank to put their money in,” he said, munching on hors d’oeuvres. “It’s just kind of ironic.”

Oh, Christ, I thought. He’s saying the protesters are hypocrites because they’re using banks. I sighed.

“Listen,” I said, “where else are you going to put three hundred thousand dollars? A shopping bag?”

“Well,” he said, “it’s just, they’re protests are all about… You know…”

“Dude,” I said. “These people aren’t protesting money. They’re not protesting banking. They’re protesting corruption on Wall Street.”

“Whatever,” he said, shrugging.

These nutty criticisms of the protests are spreading like cancer. Earlier that same day, I’d taped a TV segment on CNN with Will Cain from the National Review, and we got into an argument on the air. Cain and I agreed about a lot of the problems on Wall Street, but when it came to the protesters, we disagreed on one big thing.

Cain said he believed that the protesters are driven by envy of the rich.

“I find the one thing [the protesters] have in common revolves around the human emotions of envy and entitlement,” he said. “What you have is more than what I have, and I’m not happy with my situation.”

Cain seems like a nice enough guy, but I nearly blew my stack when I heard this. When you take into consideration all the theft and fraud and market manipulation and other evil shit Wall Street bankers have been guilty of in the last ten-fifteen years, you have to have balls like church bells to trot out a propaganda line that says the protesters are just jealous of their hard-earned money.

Think about it: there have always been rich and poor people in America, so if this is about jealousy, why the protests now? The idea that masses of people suddenly discovered a deep-seated animus/envy toward the rich – after keeping it strategically hidden for decades – is crazy.

Where was all that class hatred in the Reagan years, when openly dumping on the poor became fashionable? Where was it in the last two decades, when unions disappeared and CEO pay relative to median incomes started to triple and quadruple?

The answer is, it was never there. If anything, just the opposite has been true. Americans for the most part love the rich, even the obnoxious rich. And in recent years, the harder things got, the more we’ve obsessed over the wealth dream. As unemployment skyrocketed, people tuned in in droves to gawk at Evrémonde-heiresses like Paris Hilton, or watch bullies like Donald Trump fire people on TV.

Moreover, the worse the economy got, the more being a millionaire or a billionaire somehow became a qualification for high office, as people flocked to voting booths to support politicians with names like Bloomberg and Rockefeller and Corzine, names that to voters symbolized success and expertise at a time when few people seemed to have answers. At last count, there were 245 millionaires in congress, including 66 in the Senate.

And we hate the rich? Come on. Success is the national religion, and almost everyone is a believer. Americans love winners.  But that’s just the problem. These guys on Wall Street are not winning – they’re cheating. And as much as we love the self-made success story, we hate the cheater that much more.

In this country, we cheer for people who hit their own home runs – not shortcut-chasing juicers like Bonds and McGwire, Blankfein and Dimon.

That’s why it’s so obnoxious when people say the protesters are just sore losers who are jealous of these smart guys in suits who beat them at the game of life. This isn’t disappointment at having lost. It’s anger because those other guys didn’t really win. And people now want the score overturned.

All weekend I was thinking about this “jealousy” question, and I just kept coming back to all the different ways the game is rigged. People aren’t jealous and they don’t want privileges. They just want a level playing field, and they want Wall Street to give up its cheat codes, things like:

FREE MONEY. Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve. They borrow at zero and lend the same money back to the government at two or three percent, a valuable public service otherwise known as “standing in the middle and taking a gigantic cut when the government decides to lend money to itself.”

Or the banks borrow billions at zero and lend mortgages to us at four percent, or credit cards at twenty or twenty-five percent. This is essentially an official government license to be rich, handed out at the expense of prudent ordinary citizens, who now no longer receive much interest on their CDs or other saved income. It is virtually impossible to not make money in banking when you have unlimited access to free money, especially when the government keeps buying its own cash back from you at market rates.

Your average chimpanzee couldn’t fuck up that business plan, which makes it all the more incredible that most of the too-big-to-fail banks are nonetheless still functionally insolvent, and dependent upon bailouts and phony accounting to stay above water. Where do the protesters go to sign up for their interest-free billion-dollar loans?

CREDIT AMNESTY. If you or I miss a $7 payment on a Gap card or, heaven forbid, a mortgage payment, you can forget about the great computer in the sky ever overlooking your mistake. But serial financial fuckups like Citigroup and Bank of America overextended themselves by the hundreds of billions and pumped trillions of dollars of deadly leverage into the system — and got rewarded with things like the Temporary Liquidity Guarantee Program, an FDIC plan that allowed irresponsible banks to borrow against the government’s credit rating.

This is equivalent to a trust fund teenager who trashes six consecutive off-campus apartments and gets rewarded by having Daddy co-sign his next lease. The banks needed programs like TLGP because without them, the market rightly would have started charging more to lend to these idiots. Apparently, though, we can’t trust the free market when it comes to Bank of America, Goldman, Sachs, Citigroup, etc.

In a larger sense, the TBTF banks all have the implicit guarantee of the federal government, so investors know it’s relatively safe to lend to them — which means it’s now cheaper for them to borrow money than it is for, say, a responsible regional bank that didn’t jack its debt-to-equity levels above 35-1 before the crash and didn’t dabble in toxic mortgages. In other words, the TBTF banks got better credit for being less responsible. Click on freecreditscore.com to see if you got the same deal.

STUPIDITY INSURANCE. Defenders of the banks like to talk a lot about how we shouldn’t feel sorry for people who’ve been foreclosed upon, because it’s they’re own fault for borrowing more than they can pay back, buying more house than they can afford, etc. And critics of OWS have assailed protesters for complaining about things like foreclosure by claiming these folks want “something for nothing.”

This is ironic because, as one of the Rolling Stone editors put it last week, “something for nothing is Wall Street’s official policy.” In fact, getting bailed out for bad investment decisions has been de rigeur on Wall Street not just since 2008, but for decades.

Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they’ve scored bailouts. It doesn’t matter whether it was the Mexican currency bailout of 1994 (when the state bailed out speculators who gambled on the peso) or the IMF/World Bank bailout of Russia in 1998 (a bailout of speculators in the “emerging markets”) or the Long-Term Capital Management Bailout of the same year (in which the rescue of investors in a harebrained hedge-fund trading scheme was deemed a matter of international urgency by the Federal Reserve), Wall Street has long grown accustomed to getting bailed out for its mistakes.

The 2008 crash, of course, birthed a whole generation of new bailout schemes. Banks placed billions in bets with AIG and should have lost their shirts when the firm went under — AIG went under, after all, in large part because of all the huge mortgage bets the banks laid with the firm — but instead got the state to pony up $180 billion or so to rescue the banks from their own bad decisions.

This sort of thing seems to happen every time the banks do something dumb with their money. Just recently, the French and Belgian authorities cooked up a massive bailout of the French bank Dexia, whose biggest trading partners included, surprise, surprise, Goldman, Sachs and Morgan Stanley. Here’s how the New York Times explained the bailout:

To limit damage from Dexia’s collapse, the bailout fashioned by the French and Belgian governments may make these banks and other creditors whole — that is, paid in full for potentially tens of billions of euros they are owed. This would enable Dexia’s creditors and trading partners to avoid losses they might otherwise suffer…

When was the last time the government stepped into help you “avoid losses you might otherwise suffer?” But that’s the reality we live in. When Joe Homeowner bought too much house, essentially betting that home prices would go up, and losing his bet when they dropped, he was an irresponsible putz who shouldn’t whine about being put on the street.

But when banks bet billions on a firm like AIG that was heavily invested in mortgages, they were making the same bet that Joe Homeowner made, leaving themselves hugely exposed to a sudden drop in home prices. But instead of being asked to “suck it in and cope” when that bet failed, the banks instead went straight to Washington for a bailout — and got it.

UNGRADUATED TAXES. I’ve already gone off on this more than once, but it bears repeating. Bankers on Wall Street pay lower tax rates than most car mechanics. When Warren Buffet released his tax information, we learned that with taxable income of $39 million, he paid $6.9 million in taxes last year, a tax rate of about 17.4%.

Most of Buffet’s income, it seems, was taxed as either “carried interest” (i.e. hedge-fund income) or long-term capital gains, both of which carry 15% tax rates, half of what many of the Zucotti park protesters will pay.

As for the banks, as companies, we’ve all heard the stories. Goldman, Sachs in 2008 – this was the same year the bank reported $2.9 billion in profits, and paid out over $10 billion in compensation —  paid just $14 million in taxes, a 1% tax rate.

Bank of America last year paid not a single dollar in taxes — in fact, it received a “tax credit” of $1 billion. There are a slew of troubled companies that will not be paying taxes for years, including Citigroup and CIT.

When GM bought the finance company AmeriCredit, it was able to marry its long-term losses to AmeriCredit’s revenue stream, creating a tax windfall worth as much as $5 billion. So even though AmeriCredit is expected to post earnings of $8-$12 billion in the next decade or so, it likely won’t pay any taxes during that time, because its revenue will be offset by GM’s losses.

Thank God our government decided to pledge $50 billion of your tax dollars to a rescue of General Motors! You just paid for one of the world’s biggest tax breaks.

And last but not least, there is:

GET OUT OF JAIL FREE. One thing we can still be proud of is that America hasn’t yet managed to achieve the highest incarceration rate in history — that honor still goes to the Soviets in the Stalin/Gulag era. But we do still have about 2.3 million people in jail in America.

Virtually all 2.3 million of those prisoners come from “the 99%.” Here is the number of bankers who have gone to jail for crimes related to the financial crisis: 0.

Millions of people have been foreclosed upon in the last three years. In most all of those foreclosures, a regional law enforcement office — typically a sheriff’s office — was awarded fees by the court as part of the foreclosure settlement, settlements which of course were often rubber-stamped by a judge despite mountains of perjurious robosigned evidence.

That means that every single time a bank kicked someone out of his home, a local police department got a cut. Local sheriff’s offices also get cuts of almost all credit card judgments, and other bank settlements. If you’re wondering how it is that so many regional police departments have the money for fancy new vehicles and SWAT teams and other accoutrements, this is one of your answers.

What this amounts to is the banks having, as allies, a massive armed police force who are always on call, ready to help them evict homeowners and safeguard the repossession of property. But just see what happens when you try to call the police to prevent an improper foreclosure. Then, suddenly, the police will not get involved. It will be a “civil matter” and they won’t intervene.

The point being: if you miss a few home payments, you have a very high likelihood of colliding with a police officer in the near future. But if you defraud a pair of European banks out of a billion dollars  — that’s a billion, with a b — you will never be arrested, never see a policeman, never see the inside of a jail cell.

Your settlement will be worked out not with armed police, but with regulators in suits who used to work for your company or one like it. And you’ll have, defending you, a former head of that regulator’s agency. In the end, a fine will be paid to the government, but it won’t come out of your pocket personally; it will be paid by your company’s shareholders. And there will be no admission of criminal wrongdoing.

The Abacus case, in which Goldman helped a hedge fund guy named John Paulson beat a pair of European banks for a billion dollars, tells you everything you need to know about the difference between our two criminal justice systems. The settlement was $550 million — just over half of the damage.

Can anyone imagine a common thief being caught by police and sentenced to pay back half of what he took? Just one low-ranking individual in that case was charged (case pending), and no individual had to reach into his pocket to help cover the fine. The settlement Goldman paid to to the government was about 1/24th of what Goldman received from the government just in the AIG bailout. And that was the toughest “punishment” the government dished out to a bank in the wake of 2008.

The point being: we have a massive police force in America that outside of lower Manhattan prosecutes crime and imprisons citizens with record-setting, factory-level efficiency, eclipsing the incarceration rates of most of history’s more notorious police states and communist countries.

But the bankers on Wall Street don’t live in that heavily-policed country. There are maybe 1000 SEC agents policing that sector of the economy, plus a handful of FBI agents. There are nearly that many police officers stationed around the polite crowd at Zucotti park.

These inequities are what drive the OWS protests. People don’t want handouts. It’s not a class uprising and they don’t want civil war — they want just the opposite. They want everyone to live in the same country, and live by the same rules. It’s amazing that some people think that that’s asking a lot.

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Wall Street Isn’t Winning – It’s Cheating

POSTED: October 25, 9:26 AM ET

occupy wall street london sign

A protestor’s sign expresses the sentiment of the Occupy Wall Street movement at a Occupy Wall Street protest in London.
BEN STANSALL/AFP/Getty Images

I was at an event on the Upper East Side last Friday night when I got to talking with a salesman in the media business. The subject turned to Zucotti Park and Occupy Wall Street, and he was chuckling about something he’d heard on the news.

“I hear [Occupy Wall Street] has a CFO,” he said. “I think that’s funny.”

“Okay, I’ll bite,” I said. “Why is that funny?”

“Well, I heard they’re trying to decide what bank to put their money in,” he said, munching on hors d’oeuvres. “It’s just kind of ironic.”

Oh, Christ, I thought. He’s saying the protesters are hypocrites because they’re using banks. I sighed.

“Listen,” I said, “where else are you going to put three hundred thousand dollars? A shopping bag?”

“Well,” he said, “it’s just, they’re protests are all about… You know…”

“Dude,” I said. “These people aren’t protesting money. They’re not protesting banking. They’re protesting corruption on Wall Street.”

“Whatever,” he said, shrugging.

These nutty criticisms of the protests are spreading like cancer. Earlier that same day, I’d taped a TV segment on CNN with Will Cain from the National Review, and we got into an argument on the air. Cain and I agreed about a lot of the problems on Wall Street, but when it came to the protesters, we disagreed on one big thing.

Cain said he believed that the protesters are driven by envy of the rich.

“I find the one thing [the protesters] have in common revolves around the human emotions of envy and entitlement,” he said. “What you have is more than what I have, and I’m not happy with my situation.”

Cain seems like a nice enough guy, but I nearly blew my stack when I heard this. When you take into consideration all the theft and fraud and market manipulation and other evil shit Wall Street bankers have been guilty of in the last ten-fifteen years, you have to have balls like church bells to trot out a propaganda line that says the protesters are just jealous of their hard-earned money.

Think about it: there have always been rich and poor people in America, so if this is about jealousy, why the protests now? The idea that masses of people suddenly discovered a deep-seated animus/envy toward the rich – after keeping it strategically hidden for decades – is crazy.

Where was all that class hatred in the Reagan years, when openly dumping on the poor became fashionable? Where was it in the last two decades, when unions disappeared and CEO pay relative to median incomes started to triple and quadruple?

The answer is, it was never there. If anything, just the opposite has been true. Americans for the most part love the rich, even the obnoxious rich. And in recent years, the harder things got, the more we’ve obsessed over the wealth dream. As unemployment skyrocketed, people tuned in in droves to gawk at Evrémonde-heiresses like Paris Hilton, or watch bullies like Donald Trump fire people on TV.

Moreover, the worse the economy got, the more being a millionaire or a billionaire somehow became a qualification for high office, as people flocked to voting booths to support politicians with names like Bloomberg and Rockefeller and Corzine, names that to voters symbolized success and expertise at a time when few people seemed to have answers. At last count, there were 245 millionaires in congress, including 66 in the Senate.

And we hate the rich? Come on. Success is the national religion, and almost everyone is a believer. Americans love winners.  But that’s just the problem. These guys on Wall Street are not winning – they’re cheating. And as much as we love the self-made success story, we hate the cheater that much more.

In this country, we cheer for people who hit their own home runs – not shortcut-chasing juicers like Bonds and McGwire, Blankfein and Dimon.

That’s why it’s so obnoxious when people say the protesters are just sore losers who are jealous of these smart guys in suits who beat them at the game of life. This isn’t disappointment at having lost. It’s anger because those other guys didn’t really win. And people now want the score overturned.

All weekend I was thinking about this “jealousy” question, and I just kept coming back to all the different ways the game is rigged. People aren’t jealous and they don’t want privileges. They just want a level playing field, and they want Wall Street to give up its cheat codes, things like:

FREE MONEY. Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve. They borrow at zero and lend the same money back to the government at two or three percent, a valuable public service otherwise known as “standing in the middle and taking a gigantic cut when the government decides to lend money to itself.”

Or the banks borrow billions at zero and lend mortgages to us at four percent, or credit cards at twenty or twenty-five percent. This is essentially an official government license to be rich, handed out at the expense of prudent ordinary citizens, who now no longer receive much interest on their CDs or other saved income. It is virtually impossible to not make money in banking when you have unlimited access to free money, especially when the government keeps buying its own cash back from you at market rates.

Your average chimpanzee couldn’t fuck up that business plan, which makes it all the more incredible that most of the too-big-to-fail banks are nonetheless still functionally insolvent, and dependent upon bailouts and phony accounting to stay above water. Where do the protesters go to sign up for their interest-free billion-dollar loans?

CREDIT AMNESTY. If you or I miss a $7 payment on a Gap card or, heaven forbid, a mortgage payment, you can forget about the great computer in the sky ever overlooking your mistake. But serial financial fuckups like Citigroup and Bank of America overextended themselves by the hundreds of billions and pumped trillions of dollars of deadly leverage into the system — and got rewarded with things like the Temporary Liquidity Guarantee Program, an FDIC plan that allowed irresponsible banks to borrow against the government’s credit rating.

This is equivalent to a trust fund teenager who trashes six consecutive off-campus apartments and gets rewarded by having Daddy co-sign his next lease. The banks needed programs like TLGP because without them, the market rightly would have started charging more to lend to these idiots. Apparently, though, we can’t trust the free market when it comes to Bank of America, Goldman, Sachs, Citigroup, etc.

In a larger sense, the TBTF banks all have the implicit guarantee of the federal government, so investors know it’s relatively safe to lend to them — which means it’s now cheaper for them to borrow money than it is for, say, a responsible regional bank that didn’t jack its debt-to-equity levels above 35-1 before the crash and didn’t dabble in toxic mortgages. In other words, the TBTF banks got better credit for being less responsible. Click on freecreditscore.com to see if you got the same deal.

STUPIDITY INSURANCE. Defenders of the banks like to talk a lot about how we shouldn’t feel sorry for people who’ve been foreclosed upon, because it’s they’re own fault for borrowing more than they can pay back, buying more house than they can afford, etc. And critics of OWS have assailed protesters for complaining about things like foreclosure by claiming these folks want “something for nothing.”

This is ironic because, as one of the Rolling Stone editors put it last week, “something for nothing is Wall Street’s official policy.” In fact, getting bailed out for bad investment decisions has been de rigeur on Wall Street not just since 2008, but for decades.

Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they’ve scored bailouts. It doesn’t matter whether it was the Mexican currency bailout of 1994 (when the state bailed out speculators who gambled on the peso) or the IMF/World Bank bailout of Russia in 1998 (a bailout of speculators in the “emerging markets”) or the Long-Term Capital Management Bailout of the same year (in which the rescue of investors in a harebrained hedge-fund trading scheme was deemed a matter of international urgency by the Federal Reserve), Wall Street has long grown accustomed to getting bailed out for its mistakes.

The 2008 crash, of course, birthed a whole generation of new bailout schemes. Banks placed billions in bets with AIG and should have lost their shirts when the firm went under — AIG went under, after all, in large part because of all the huge mortgage bets the banks laid with the firm — but instead got the state to pony up $180 billion or so to rescue the banks from their own bad decisions.

This sort of thing seems to happen every time the banks do something dumb with their money. Just recently, the French and Belgian authorities cooked up a massive bailout of the French bank Dexia, whose biggest trading partners included, surprise, surprise, Goldman, Sachs and Morgan Stanley. Here’s how the New York Times explained the bailout:

To limit damage from Dexia’s collapse, the bailout fashioned by the French and Belgian governments may make these banks and other creditors whole — that is, paid in full for potentially tens of billions of euros they are owed. This would enable Dexia’s creditors and trading partners to avoid losses they might otherwise suffer…

When was the last time the government stepped into help you “avoid losses you might otherwise suffer?” But that’s the reality we live in. When Joe Homeowner bought too much house, essentially betting that home prices would go up, and losing his bet when they dropped, he was an irresponsible putz who shouldn’t whine about being put on the street.

But when banks bet billions on a firm like AIG that was heavily invested in mortgages, they were making the same bet that Joe Homeowner made, leaving themselves hugely exposed to a sudden drop in home prices. But instead of being asked to “suck it in and cope” when that bet failed, the banks instead went straight to Washington for a bailout — and got it.

UNGRADUATED TAXES. I’ve already gone off on this more than once, but it bears repeating. Bankers on Wall Street pay lower tax rates than most car mechanics. When Warren Buffet released his tax information, we learned that with taxable income of $39 million, he paid $6.9 million in taxes last year, a tax rate of about 17.4%.

Most of Buffet’s income, it seems, was taxed as either “carried interest” (i.e. hedge-fund income) or long-term capital gains, both of which carry 15% tax rates, half of what many of the Zucotti park protesters will pay.

As for the banks, as companies, we’ve all heard the stories. Goldman, Sachs in 2008 – this was the same year the bank reported $2.9 billion in profits, and paid out over $10 billion in compensation —  paid just $14 million in taxes, a 1% tax rate.

Bank of America last year paid not a single dollar in taxes — in fact, it received a “tax credit” of $1 billion. There are a slew of troubled companies that will not be paying taxes for years, including Citigroup and CIT.

When GM bought the finance company AmeriCredit, it was able to marry its long-term losses to AmeriCredit’s revenue stream, creating a tax windfall worth as much as $5 billion. So even though AmeriCredit is expected to post earnings of $8-$12 billion in the next decade or so, it likely won’t pay any taxes during that time, because its revenue will be offset by GM’s losses.

Thank God our government decided to pledge $50 billion of your tax dollars to a rescue of General Motors! You just paid for one of the world’s biggest tax breaks.

And last but not least, there is:

GET OUT OF JAIL FREE. One thing we can still be proud of is that America hasn’t yet managed to achieve the highest incarceration rate in history — that honor still goes to the Soviets in the Stalin/Gulag era. But we do still have about 2.3 million people in jail in America.

Virtually all 2.3 million of those prisoners come from “the 99%.” Here is the number of bankers who have gone to jail for crimes related to the financial crisis: 0.

Millions of people have been foreclosed upon in the last three years. In most all of those foreclosures, a regional law enforcement office — typically a sheriff’s office — was awarded fees by the court as part of the foreclosure settlement, settlements which of course were often rubber-stamped by a judge despite mountains of perjurious robosigned evidence.

That means that every single time a bank kicked someone out of his home, a local police department got a cut. Local sheriff’s offices also get cuts of almost all credit card judgments, and other bank settlements. If you’re wondering how it is that so many regional police departments have the money for fancy new vehicles and SWAT teams and other accoutrements, this is one of your answers.

What this amounts to is the banks having, as allies, a massive armed police force who are always on call, ready to help them evict homeowners and safeguard the repossession of property. But just see what happens when you try to call the police to prevent an improper foreclosure. Then, suddenly, the police will not get involved. It will be a “civil matter” and they won’t intervene.

The point being: if you miss a few home payments, you have a very high likelihood of colliding with a police officer in the near future. But if you defraud a pair of European banks out of a billion dollars  — that’s a billion, with a b — you will never be arrested, never see a policeman, never see the inside of a jail cell.

Your settlement will be worked out not with armed police, but with regulators in suits who used to work for your company or one like it. And you’ll have, defending you, a former head of that regulator’s agency. In the end, a fine will be paid to the government, but it won’t come out of your pocket personally; it will be paid by your company’s shareholders. And there will be no admission of criminal wrongdoing.

The Abacus case, in which Goldman helped a hedge fund guy named John Paulson beat a pair of European banks for a billion dollars, tells you everything you need to know about the difference between our two criminal justice systems. The settlement was $550 million — just over half of the damage.

Can anyone imagine a common thief being caught by police and sentenced to pay back half of what he took? Just one low-ranking individual in that case was charged (case pending), and no individual had to reach into his pocket to help cover the fine. The settlement Goldman paid to to the government was about 1/24th of what Goldman received from the government just in the AIG bailout. And that was the toughest “punishment” the government dished out to a bank in the wake of 2008.

The point being: we have a massive police force in America that outside of lower Manhattan prosecutes crime and imprisons citizens with record-setting, factory-level efficiency, eclipsing the incarceration rates of most of history’s more notorious police states and communist countries.

But the bankers on Wall Street don’t live in that heavily-policed country. There are maybe 1000 SEC agents policing that sector of the economy, plus a handful of FBI agents. There are nearly that many police officers stationed around the polite crowd at Zucotti park.

These inequities are what drive the OWS protests. People don’t want handouts. It’s not a class uprising and they don’t want civil war — they want just the opposite. They want everyone to live in the same country, and live by the same rules. It’s amazing that some people think that that’s asking a lot

Read more: http://www.rollingstone.com/politics/blogs/taibblog/owss-beef-wall-street-isnt-winning-its-cheating-20111025#ixzz1c4e4fANh

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Occupy Wall Street: Not Here To Destroy Capitalism, But To Remind Us Who Saved It

Occupy Dc

First Posted: 10/27/11 04:40 PM ET Updated: 10/27/11 04:40 PM ET

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Over at The New York Times, Nicholas Kristof has enunciated an excellent defense of the Occupy Wall Street demonstrators, aimed at dispelling the notion that the Occupiers are some single-minded mass movement targeting the capitalist system for destruction. In fact, Kristof says, “while alarmists seem to think that the movement is a ‘mob’ trying to overthrow capitalism, one can make a case that, on the contrary, it highlights the need to restore basic capitalist principles like accountability.”

Kristof says that what Occupy Wall Street represents is “a chance to save capitalism from crony capitalists” and an entrenched system of “government-backed featherbed[ding]” that amounts to “socialism for tycoons and capitalism for the rest of us.” As Kristof notes, he’s seen this before: Years of covering the ’90s-era Asian financial crisis brought Kristof face-to-face with the same critique. It’s now unspooling in the United States and having its own deleterious effects, such as the near-intractable income inequality that was, at long last, reported on fully this week (perhaps thanks to the presence of the Occupiers themselves).

Kristof’s right to suggest that the Occupiers aren’t “half-naked Communists aiming to bring down the American economic system.” This isn’t the “Project Mayhem” of Chuck Palahniuk novels — we’re talking about a movement that’s spurring people to move their money from “too big to fail” banks into credit unions. That’s not exactly “smash the system.” That’s more like a group of people seeking out a means to maximize their power within the system, or using consumer choice to preserve, enhance and improve the best parts of the system. As Matt Taibbi notes in a fitting companion piece to Kristof’s, “These people aren’t protesting money. They’re not protesting banking. They’re protesting corruption on Wall Street.”

Taibbi calls them “cheaters,” Kristof calls them “cronies,” but the concept of “corruption” is intrinsic to both critiques. In fact, one could well argue that the truest evidence of Wall Street corruption is the fact that prior to the economic collapse, what Wall Street was practicing wasn’t really “capitalism” at all.

And here, Kristof absolutely nails it:

Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.

Way back when Julie Satow and I were attempting to explain the role the credit derivatives and AIG played in destroying our future, there was one question that resonated with me: What happened to that elementary ingredient of capitalism known as risk? If you want to tell the story of what was going on prior to September of 2008 in one sentence, here you go: Wall Street came to believe that they had finally figured out how to rid themselves of risk — that “possibility of failure” — entirely, and thus outsmart capitalism. (Calvin Trillin puts this more artfully than I ever could, here.) Firm in that belief, they bet and they hedged and they overleveraged themselves to the point of pure abuse.

But as we all saw in the fall of 2008, the risk never went away. Rather, it was lying in wait to provide us with a dramatic demonstration of the folly of forgetting about risk. It was very quickly revealed that the pure product of Wall Street’s easy-money casino game was actually a coiled-up cock-up cobra ready to bite the global economy in the face, and when it bit, it plunged the global economic system to the brink of calamity.

There are a lot of ways to tell the story about how the world was saved, but the Occupy Wall Street is starting to remind the world of one narrative in particular. When everything seemed ready to collapse, there was one group of people left in this world who had enough cred on the street to save the day — the American taxpayers. They were the only people left in whom anyone would put their full faith and credit as a sure thing. And it’s easy to see why, seeing as they had built the greatest nation on earth out of their combined blood, sweat and tears.

It was the American taxpayers who went to war, on everyone’s behalf, with that dread cobra, and they sacrificed $4.7 trillion of their own money to bring everyone back from the brink. That’s $4.7 trillion that the American taxpayer willingly parted with, money that could have been put to any other priority. There’s still about a trillion and half that hasn’t even been returned — but that’s not where our focus should be. Our focus should be on the other scars left by that sacrifice. A massive unemployment crisis, people being kicked out of their homes, college graduates leaving their institutions of higher learning without a clear grasp on a future and saddled with debt (because that’s what they were told to do to get ahead in this world) — that’s where our focus should have been, but wasn’t, until those folks started gathering in the streets.

Three years later, if you even allude to that sacrifice, you still elicit from all sides the cry of “class warfare.” And I’ll admit, it’s a pretty seductive metaphor. Not long ago, my counter to that charge was to point out that the Occupiers were an encampment of casualties and refugees from the last class war. But I’ve since realized that while this is a good, glib line, the politics are too convenient. In reality, the people of Occupy Wall Street are the people who fought the last war on everyone’s behalf. They are a neglected band of veterans from the Battle To Save The Global Economy. They’re attempting to remind America that we all fought on the same side.

And, yes, as Kristof suggests, they are asking for accountability. From cronies, from cheaters — if you really want to know who owes us accountability, go ahead and read this “Cheat Sheet” from ProPublica. All the devils are there.

Naturally, the Wall Street gentry want to get back to the old way of doing business, and they’re calling for further deregulation and less oversight of their activities. They scoff at the notion that our bailout of their failure requires them to return to making productive investments in their saviors’ futures. And they flaunt the fact that they’ve reneged on the social contract, using our bailout money to procure an army of lobbyists to return things to the status quo ante.

Three years on, Wall Street still believes they’re smart enough to beat capitalism. But they should really stroll down to Zuccotti Park and take stock of the weakened and demoralized army that won’t be strong enough to rescue them when they fuck up again.

READ THE WHOLE THING:
Crony Capitalism Comes Home [Nick Kristof @ New York Times]
Wall Street Isn’t Winning — It’s Cheating [Taibblog]
Cheat Sheet: What’s Happened to the Big Players in the Financial Crisis [ProPublica]

[Would you like to follow me on Twitter? Because why not? Also, please send tips to tv@huffingtonpost.com — learn more about our media monitoring project here.]

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If America had $100 and 100 people…

Here’s an easy way to look at income distribution and how it has changed over the years. Let’s pretend America has 100 people in it and that the total income for all of America is $100. If everyone made the same per year, everyone would get $1.00 each.

Obviously no free market society operates that way. Instead, there is variability in talent and capability, and some people are able to perform some very important jobs better than others. Those talented people are hired at a premium, and thus they make more than others. That gives us an income distribution, with some people making more money than others. In our example, some people are going to get more than a dollar and some will get less. That’s reality.

So how has the income distribution changed in our society since 1979? I’ve been going through the latest data from the CBO and have come up with a couple of figs to describe this.

First a little about “binning”. A data set is best illustrated when you put them into categories, or bins. The CBO has made five bins, called quintiles. Thus, the bottom 20% is the lowest quintile, the people who accrue on average between 20% and 40% the total share of income per year are in the second quintile, and so on. The problem with binning is that you lose resolution. The CBO only chose 5 bins, and therefore it is impossible to say what is happening within a given bin (except for the highest quintile; more on that later).

Below is a figure that illustrates how income would be distributed to the various quintiles if our economy were $100 large and the US had a population of 100 households. The value at any given point is the average amount of $100 dollars each person receives per bin.
Thus, in 1979 each of the twenty people in the lowest quintile received $0.26, and each of the twenty people in the highest quintile received $2.21. As you can see, though, that the amount of the pie each group gets per year has changed over time. The top 20% has expanded it slice of the pie, while the bottom 80% has gotten a smaller and smaller piece of the pie. For example, in 2005 the twenty people in the lowest quintile received only $0.19 each, and each of the twenty people in the highest quintile received $2.73. In other words, the top twenty people get $54 of the $100 and leave $46 for the rest of the 80 people. The change over time can be illustrated as a % change distribution of the $100.

This figure shows that the piece of the pie given to the wealthiest people in the US has grown by 23% over the last 26 years. The piece of the pie given to the bottom 80% has decreased since then, as much as 28% for the bottom 20 people. The percentages don’t add up because this is how each piece of the pie has changed over time. The bottom has a small piece to begin with; thus, a small decrease for them is actually quite big, relatively speaking.

The CBO also provides data for income distribution for within the highest percentile. The break the data down by Top 10%, Top 5%, and Top 1%. I showed you above that, on average, each of the top 20 get $2.73. But what if you break the top 20 into categories themselves? How does the $100 breakdown after that? Glad you asked…

Remember, this fig represents how much each person in each group receives out of $100. Unlike above, when we were just looking at quintiles, not all the groups are the same size. The Top 1% has only 1 person, the Top 5% -1% has 4 people, and so on till we get to the quintiles where there are 20 people per group.

As you can see, the distribution of the $54 to the top 20 people is actually highly skewed as well. In fact, it is so skewed I had to magnify the y-axis in order to make room for all the other data points for the bottom 95%. This is because the share of the $100 the top 1%, which in our example is one household, is so much greater than everyone else. That one person received $8.73 of the $100 dollars in 1979; in 2005 that one person got $18.39. How has the percentages changed over time? Each of the 4 people in the Top 5% -1% group received $2.71 in 1979 and $3.18 in 2005, on average.
The only group that hasn’t changed much is the people ranked from 5 to 10 since 1979. The bottom 90 people have gotten a smaller piece of the pie over time. The #1 person has more than doubled his take. The only people to significantly increase their share of the $100 over time is the top 5 people.

So how did we get to this situation? More on that later…

source

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The rich are getting richer and the poor are getting poorer.

Cliché, sure, but it’s also more true than at any time since the Gilded Age.

The poor are getting poorer, wages are falling behind inflation, and social mobility is at an all-time low.

Here’s 15 Mind-Blowing Charts About Wealth And Inequality In America >

The gap between 1% and everyone else hasn’t been this bad since the roaring Twenties

The gap between 1% and everyone else hasn't been this bad since the roaring Twenties

Source: The Nation

Half of America has only 2.5% of the wealth

Half of America has only 2.5% of the wealth

Source: Institute for Policy Studies

Half of America has only 0.5% of the stocks and bonds

Half of America has only 0.5% of the stocks and bonds

Source: Institute for Policy Studies

Look at the gap grow!

Look at the gap grow!

Source: Professor G. William Domhoff

The last two decades were great… except for American workers

The last two decades were great... except for American workers

 

Real average earnings have not increased in 50 years

Real average earnings have not increased in 50 years

 

But savings rates are sinking

But savings rates are sinking

 

Poor Americans have a SLIM CHANCE of rising to the upper middle class

Poor Americans have a SLIM CHANCE of rising to the upper middle class

Source: NBER

Republican tax cuts have significantly increased the gap

Republican tax cuts have significantly increased the gap

Source:

Taxes get better and better for the rich

Taxes get better and better for the rich

 

America spreads the wealth FAR LESS than other developed countries

America spreads the wealth FAR LESS than other developed countries

 

America’s income spread is nearly twice the OECD average

America's income spread is nearly twice the OECD average

Source: Economist

The gap is NOT growing in many countries, like France

The gap is NOT growing in many countries, like France

 

Inequality is worst around Wall Street and Oil Land

Inequality is worst around Wall Street and Oil Land

 

If you aren’t in the top 1%, then you’re getting a bum deal

If you aren't in the top 1%, then you're getting a bum deal

 

Now read…

Now read...

20 Cities That Have Completely Missed The Recovery

 

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